Verizon Reports Declining Revenues, Yahoo Deal Chaos And A Data Center Sale

Telecom giant Verizon's Q3 2016 earnings missed the mark on Thursday with declining revenues across the board. The carrier also confirmed that it is actively pursuing the sale of data center assets.

The earnings call comes as reports suggest that Verizon may be looking to renegotiate or walk away from -- its pending $4.8 billion acquisition of ailing Internet giant Yahoo, following news of a large-scale hack that impacted about 500 million Yahoo user accounts.

During its Q3 2016 earnings call, Fran Shammo, executive vice president and Chief Financial Officer for Verizon reiterated that the carrier is still evaluating what the security breach means for the transaction.

[Related: Verizon Remains Mum On Yahoo Acquisition Status In Aftermath Of Hack]

"This was an extremely large breach that has received a lot of attention from a lot of different people. We have to assume that it will have a material impact on Yahoo," Shammo said. "It's going to take some time to evaluate this, so until then, we haven't reached any final conclusions around this issue."

Despite declining to comment further on the matter, the carrier did include a mention of Yahoo in its discussion of strategic plans for growth.

"We expect that the pending acquisition of Yahoo will further expand our leadership in the digital media space," Shammo said during the earnings call.

For the quarter ended Sept. 30, total operating revenues within Verizon's wireline business segment slipped from $7.9 billion in Q2 2015, to $7.8 during Q3 2016. Global enterprise revenues were down 3.4 percent year-over-year, from $2.9 billion, to $2.8 billion. The carrier attributed this decline to the sale of its wireline assets in three states to Frontier Communications.

Small business wireline revenue also declined to $411 million, from $434 million in the year-ago period.

Verizon, however, was pleased with its wireline results following the large-scale strike that included nearly 40,000 employees. The strike, which lasted from April to June this year, impacted Verizon's second quarter earnings, Shammo said.

Verizon reported total operating revenues of $30.9 billion and earnings per share of 89 cents, down from $33.2 and earnings per share of 99 cents in Q3 2015. Net income also sank, falling from $4.2 billion in the year-ago period to $3.7 billion in Q3 2016.

The Basking Ridge, N.J.-based telco's earnings did meet Wall Street expectations, however. Analysts expected Verizon to report earnings of about 99 cents a share on $31 billion in revenue, according to Thomson Reuters.

Like competing telecom provider CenturyLink, Verizon has said it would be evaluating its data center strategy. During the earning call, Shammo confirmed that Verizon is pursuing the sale of its data center assets.

"We are currently in negotiations … with one individual… and we should have something to formally announce early in the fourth quarter."

The carrier also laid out plans to continue to enhance its network with SDN, and will continue to pursue IoT opportunities. Verizon said that IoT revenues in Q3 2016 totaled $217 million.

"We are executing in a competitive environment," Shammo said of Verizon's Q3 2016 results. "We continue to invest in our networks and platforms to be the leader in the markets we serve … we are focused on developing new business models and revenue streams."