BASKING RIDGE, N.J. - Global sales of strategic solutions again propelled Verizon Business to another quarter of solid year-over-year revenue growth as the company continued to execute well in the highly competitive multinational corporate and government marketplace.
Verizon Business generated first-quarter 2008 revenues of $5.2 billion, or growth of 0.4 percent compared with last year's first quarter on an adjusted basis (non-GAAP). This is Verizon Business' sixth consecutive quarter of year-over-year, pro-forma revenue growth (non-GAAP, calculated as if Verizon and MCI had merged on Jan. 1, 2006).*
Global sales of strategic services such as IP, managed services, Ethernet and optical-ring services continued to drive strong growth, exceeding the decline in revenue during the quarter from traditional core voice and data services. In the first quarter 2008, strategic services generated $1.4 billion in revenue, up 23.5 percent from the first quarter 2007.
"These strong results show that our global strategy and strong focus on execution are working," said John Killian, president of Verizon Business. "As a leader in providing integrated communications and IT solutions to multinationals and governments, we will continue to invest in our global IP network, product set and deep professional services expertise."
Product Enhancements Strengthen Solutions Capabilities
Verizon Business continued to introduce new products and services that strengthen its ability to deliver an unsurpassed portfolio of integrated communications and computing solutions. The company has a strong focus on a broad range of business solutions including managed services, mobility, collaboration, security, applications management and professional services.
With the rollout of high-definition video conferencing, customers can benefit from clearer, crisper and higher-quality video delivered on Verizon Business' world-class public and Private IP networks. Verizon Business also offered enterprise customers with remote locations or smaller networks a robust new managed services option with its support for Juniper J-series routers.
Verizon Business also expanded the availability of several key services globally during the quarter. It rolled out its managed local area network (LAN) service in a number of countries in Europe, the Middle East and Africa, and the Asia-Pacific region, enabling customers there to fully or partially outsource end-to-end management of their corporate networks from the LAN to the wide area network (WAN). The company also expanded availability of its Hosted Interactive Voice Response (IVR) service to the European market, enabling improved contact center efficiency and enhanced overall customer satisfaction.
Further enhancing its robust suite of IT services, Verizon Business introduced a virtualization service that enables businesses to consolidate multiple IT resources such as operating systems and software applications on a single server while providing the same reliability as the traditional one-application-to-a-server model. The company also announced that its managed hosting customers will be among the first to benefit from the powerful new functionality of Microsoft Windows Server 2008, the next-generation server-operating system launched during the quarter.
Managed security services also continued to be a key area of focus during the quarter. The company unveiled a range of new global "unified threat management" offerings that combine numerous critical security functions into a single piece of equipment. Additionally, the company rolled out its Application Log Monitoring and Management Service, enabling customers to log, track and analyze user and system activity across an organization's entire IT "stack" - the computing structure that includes the network, data, application and user layers.
Verizon Business Leadership Recognized
Industry experts and partners alike continued to recognize the depth and breadth of Verizon Business' global capabilities during the quarter. Recognition included placement by analyst firm Gartner Inc. in the Leaders Quadrant in three reports released during the quarter: "Magic Quadrant for Asia/Pacific Network Service Providers, 2007;"¹ "Magic Quadrant for Pan-European Network Service Providers, 2007;"² and "Magic Quadrant for Help Desk Outsourcing Services, North America, 2008."³
Verizon Business also received a 2008 Global Wholesale Carrier Excellence award from ATLANTIC-ACM, a leading telecommunications research consultancy and benchmarking firm. Verizon Business was recognized for "best in class data quality" for its wholesale carrier services, including transport (Ethernet and wavelength), ATM/Frame and IP Transit.
During the quarter, Verizon Business also demonstrated excellence in service delivery. The company successfully completed its SAS 70 Type II examination for its application management operations center, where it remotely manages its customers' critical and often geographically dispersed infrastructure and applications. In addition, Verizon Business completed the SAS 70 Type II examination for its managed hosting centers (Smart Centers) and Internet collocation facilities (Premium Data Centers) in North America and Europe.
Network Leadership and Global Expansion
Verizon Business continued to expand and enhance its global IP network, which serves as the critical platform for the company's secure communications and IT solutions. During the quarter, the company:
- Implemented a meshed architecture on the trans-Pacific portion of its global network to provide large-business and government customers with additional paths for use in the event of multiple undersea breaks or network disruptions. The five-way mesh network design provides enhanced reliability for customer voice and data traffic traversing the Pacific Ocean.
- Deployed 18 additional Private IP nodes in major global markets to meet growing customer demand for IP communications services.
- Deployed an additional 1,820 miles on its next-generation, ultra-long-haul, optical- transport network in the U.S., which now includes more than 32,000 ULH miles. It also deployed its first ULH route outside of the U.S. in Japan.
- Activated two more 40-gigabit-per-second, backbone-network routes in the U.S.
- Installed next-generation optical-network equipment, known as reconfigurable optical-add-drop multiplexer (ROADM) technology, in five U.S markets - Chicago, San Francisco, New York City, northern New Jersey and Washington, D.C. - enabling more efficient management of bandwidth and remote configuration and provisioning of wavelengths on the network.
Verizon Business also continued to deepen its reach into high-growth global markets during the quarter. Verizon Business India received licenses for international and national long-distance services, and a consortium that includes Verizon Business was awarded a license to provide services in Saudi Arabia. The consortium, known as the Optical Communications Company, will receive management and operational support through an exclusive management services agreement with Verizon Business.
Additionally, Verizon Business announced that the first leg of the Trans-Pacific Express (TPE) submarine cable between mainland China and the U.S. will be activated in July, one month ahead of schedule. The TPE cable also will add a submarine cable link to Japan, giving customers direct connectivity from Japan to mainland China, Taiwan and South Korea in 2009.
Continued New Business Momentum
Verizon Business continued to both solidify and extend its relationships with existing large businesses and government agencies around the world while adding new business.
Multinational corporations and major regional players, including The Bank of New York Mellon, Commerce Bank, Cuatrecasas, Extended Stay Hotels, Indesit Company SpA, Insurance Auto Auctions, Komatsu Ltd, Swedish Match AB, TeleTech and Weyerhaeuser completed new agreements during the quarter for a wide range of advanced communications, IT and professional services.
The company also entered into new contracts with several U.S. government agencies, including the Department of Veterans Affairs and Department of Defense.
Specific customer applications included:
- The Bank of New York Mellon signed a contract with Verizon Business for customer premises equipment solutions that will offer the asset management and securities services company enhanced reliability for information storage, access and recovery.
- Commerce Bank, a major regional financial institution, completed an agreement during the quarter for a wide range of products and services including voice, CPE and the company's fastest-growing service, Private IP, to connect the bank's business locations.
- Cuatrecasas chose Private IP to connect its extended global enterprise, increasing geographical reach and business agility for ongoing market success.
- European household appliance manufacturer, Indesit Company SpA, will be using fully managed Private IP to link its 18 UK sites and streamline its local operations.
- Existing customer Insurance Auto Auctions also expanded its current communications contract by choosing a Managed Dedicated IP VPN to link its sites in Canada.
- Komatsu Ltd is benefiting from the global reach and reliability of Private IP. By choosing a fully managed global service, with additional Ethernet private line and colocation services for specific regions, the firm aims to centralize its operations, obtain cost efficiencies and improve business performance.
- Swedish Match AB aims to increase control and visibility over its global communications network by standardizing it with Private IP.
- TeleTech, a leading global business process outsourcing (BPO) company that provides a full range of front-office to back-office outsourced solutions, relies on Verizon Business for Private IP and CPE.
- Weyerhaeuser, one of the world's largest forest products companies, signed an agreement for managed network services to enable the company to focus on its core mission.
About Verizon Business
Verizon Business, a unit of Verizon Communications (NYSE: VZ), is a global IP leader and network-based partner for delivering integrated communications and information technology (IT) solutions to large-business and government customers worldwide. Combining unsurpassed reach with managed services, security, mobility, collaboration and professional services capabilities, Verizon Business delivers global solutions that power innovation and enable its customers to do business better. For more information, visit www.verizonbusiness.com.
¹ Gartner Research “Magic Quadrant for Asia/Pacific Network Service Providers, 2007,” February 18, 2008; Authored by To Chee Eng.
² Gartner Research “Magic Quadrant for Pan-European Network Service Providers, 2007,” December 5, 2007; Authored by Neil Rickard and Scott Morrison.
³ Gartner Research “Magic Quadrant for Help Desk Outsourcing Services, North America, 2008,” February 28, 2008; Authored by Richard Matlus and William Maurer.
* See www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for the non-GAAP financial measures included in this announcement.