BASKING RIDGE, N.J. -- Verizon Business again increased its overall revenue and achieved dramatic growth in key strategic services during the past quarter as it continued to roll out products and integrated solutions that transform the way enterprises operate.
Verizon Business reported overall third-quarter 2007 revenues of $5.3 billion, a total revenue growth of 2.2 percent compared with the third quarter of 2006 on an adjusted basis (non-GAAP).* This represents Verizon Business' fourth consecutive quarter of year-over-year, pro-forma revenue growth.
Global sales of strategic services such as IP, Ethernet and managed services continued to accelerate dramatically during the quarter, exceeding declines in revenue on a year-to-date basis from core services such as traditional voice and data. In the third quarter 2007, strategic services generated $1.4 billion in revenue, up 28.6 percent from the third quarter 2006. Strategic services revenues were also up sequentially, increasing 8 percent from the second quarter 2007.
"Verizon Business continues to solidify its position as a global IP leader and network-based solutions partner for corporations and governments worldwide," said John Killian, president of Verizon Business. "And as a global enabler of innovation, we will keep transforming the way enterprises operate today and tomorrow - powering the creativity of our customers and their customers."
Solutions Capabilities Continue to Expand
Verizon Business again moved during the quarter to enhance its already unrivaled suite of products and services as well as its position as a premier provider of end-to-end communications and information technology solutions.
Among the Verizon Business managed solutions rolled out during the quarter was a new set of mix-and-match service options for companies wishing to easily and cost-effectively upgrade company networks serving retail stores, branch offices or other remote locations. The newly expanded offerings -- which include local area networking, and security and content management -- operate on the Cisco Integrated Services Router. This managed solution reduces the space required for network equipment, limits the need for costly on-site support staff, and enables the efficient delivery of advanced services often lacking in branch offices.
Pushing further into the growing market for unified communications offerings, Verizon Business introduced its Integrated Communications Package - a dynamic hub where end-users can access voicemail, control incoming and outgoing calls, manage their online presence, send text messages, and synchronize contacts and calendars. The service enables Hosted IP Centrex customers implementing VoIP to more effectively manage their communications and enhance employee collaboration, mobility and productivity.
Other announcements during the quarter included the Verizon Integrated Optical Service, which gives enterprises a flexible, secure, cost-effective and high-bandwidth solution to converge multiple technologies onto a single network. The first such commercial offering from a U.S.-based Tier One provider, the service enables companies to integrate Ethernet service and optical technologies such as dense wave division multiplexing and synchronous optical network.
Security continues to be a key concern for global enterprises, and Verizon Business extended its Denial of Service (DoS) Defense Mitigation offering to the Asia-Pacific region while expanding European availability. This move made Verizon Business the first major global communications provider to offer these network-based security capabilities to multinational companies around the world.
In another first, Verizon Business announced that organizations will be able to measure how well their members work together and gauge how to improve collaboration, using a new Collaboration Calculator. The Web-based tool, developed by Frost & Sullivan for Verizon Business, is designed to help large businesses and government agencies quickly and simply measure the effectiveness of existing collaborative initiatives and determine potential next steps for improving teamwork to help support common business objectives and improve performance.
To further improve customers' experience in dealing with the company, Verizon Business took the following actions during the quarter:
- Enhanced its already stringent service level agreements for Private IP customers by extending its performance commitments for real-time applications all the way to customers' physical locations.
- Enabled customers to manage their telecommunications expenses more easily and efficiently by streamlining its billing processes, reducing the number of billing systems and enhancing self-service customer billing.
- Expanded global availability of the Verizon Business Customer Center portal to customers based in Asia Pacific, enabling customers there to obtain an integrated, personalized view of their complete range of network services.
Global Assets, Market Execution Recognized
During the third quarter, industry analyst firm Gartner Inc. positioned Verizon Business in the Leaders Quadrant of its annual report, "Magic Quadrant for Global Network Service Providers, 2007."**
Additionally, Verizon Business was recognized by Speech Technology magazine as a Star Performer for hosted speech services, highlighting the company's Hosted Interactive Voice Response (IVR) suite of products and services, a key offering within the innovative Verizon Business Contact Center portfolio.
Network Leadership Advances
Verizon Business during the quarter continued to strengthen its global network, which serves as the foundation both for integrated, end-to-end communications and IT solutions and for the company's unrivaled stand-alone products and services. During the quarter, the company:
- Continued deployment of the Internet's next-generation protocol, known as IPv6, on the company's public IP network. This second phase of the IPv6 deployment, expected to be completed during the next 18 months, will permit companies to fully transition to IPv6, which offers many more Internet addresses than the current IPv4 standard.
- Was recognized by TeleGeography, a research division of PriMetrica Inc., as having the world's most connected Internet backbone network. In its annual "Global Internet Geography Database and Report," TeleGeography declared that for the ninth consecutive year the Verizon Business global IP network continues to serve the Internet with the greatest number of autonomous system (AS) network connections of any public IP network in the world.
- Obtained connectivity to China Telecom's Next Convergence Network (CN2), a next-generation IP platform that covers more than 200 cities and 600 routers within China. Access to CN2 effectively extends the benefits of Verizon Business' own expansive IP backbone network and portfolio of global IP and mobile devices, services and solutions across the fast-growing Chinese market.
- Began construction under a special license for the first multi-terabit, optical submarine cable system directly linking the U.S. mainland and China. Verizon Business is the only U.S. carrier among six consortium members building the Trans-Pacific Express cable, the first cable system with direct 10 Gbps wavelength access to China. Subject to final U.S. regulatory approval, the cable system is planned for completion in the 3Q of 2008.
- Activated additional converged packet architecture switches for a total of 62 CPA switches in 51 major markets throughout the United States, Europe and the Asia-Pacific region. Additional capacity was installed in existing markets to meet customer demand.
- Added from the Cybertrust acquisition four state-of-the-art Security Operations Centers (SOCs) and seven highly-advanced data centers, known as Trust Centers, to existing Verizon Business network security operations facilities worldwide.
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 including Arup, Cavotec MSL, Deltek, Fujitsu, NAVTEQ, OMX, Schindler Elevator Corp. and Thomson Corp., as well as major U.S. regional players such as Park Nicollet Health Services, completed agreements during the quarter for a wide range of advanced communications, Information Technology (IT) and professional services. Organizations extending their master service agreements during the quarter included the Australian Federal Government's Department of Finance, the Belgian Federal Government Service for Information Communication Technology (ICT), Korn/Ferry International, Martinair and Tele Atlas Data Gent.
Specific customer applications included:
- Deltek, a leading provider of enterprise management software for project-focused organizations, will use Verizon Private IP, the company's fastest growing service, to connect its business locations worldwide.
- OMX, a leading expert in the financial exchange industry, has signed a seven-year agreement to outsource its external network operations and data center management to Verizon Business. OMX owns and operates the Nordic Exchange and supplies exchange technologies to more than 60 exchanges, clearing organizations and central securities depositories in over 50 countries worldwide.
- NAVTEQ, a leading global provider of digital map data, has signed a worldwide deal to unite its 145 operational sites with Verizon Private IP. This new communications network will assist its aggressive business expansion now and in the future.
- Martinair, the Dutch airline, signed a new three year extension to its existing contract to enhance its global WAN communications. This new network aims to continue to improve its worldwide communications as well as lower costs.
- Arup, the global firm of designers, engineers, planners and business consultants, is increasing its global communications with a new Verizon Private IP network which will connect 37 of its offices in Africa, Asia, Europe and U.S. 100 Mbps Ethernet access to Private IP will facilitate high speed connectivity for its various business requirements.
- Cavotec MSL, a global leader in the design and manufacturing of innovative power supply solutions, has recently signed an agreement to start the implementation of a Verizon Business Managed IP PBX solution. This will enable Cavotec MSL to further integrate and enhance its PBX capabilities and prepare for a smooth transition to IP telephony in the future.
- Verizon Business has been awarded a four-year contract with FEDICT, the Belgian Federal Government Service for Information Communication Technology (ICT), which is responsible for the development of common ICT infrastructures and e-government initiatives for the Belgian government. Verizon Business will implement, manage and monitor the security infrastructure for the new FEDICT data center.
- The Federal Department of Finance (Australia) has awarded Verizon Business Security Solutions a multi-tiered managed services contract to provide a range of services included managed firewall, network and host-based intrusion detection, secure access to the Dept's applications, secure Internet access, management and control of VPN plus a range of design, monitoring and management services. These services will be provided under the stringent security standards as set by the Federal Government. Verizon Business won the tender based on its proven ability to deliver and operate these complex systems in accordance with the customer's business and security requirements.
- In addition, Tele Atlas Data Gent, one of the world's most trusted sources of digital map data and dynamic content, has extended its existing contract with Verizon Business. This will expand the geographical outreach of its Verizon Private IP network into five additional sites, two of which are located within Eastern Europe.
- Korn/Ferry International, a premier global provider of executive talent management solutions, is consolidating its existing communications infrastructure onto Verizon Private IP.
- Park Nicollet Health Services, an integrated wide-ranging care system, reached an agreement with Nortel and Verizon Business under which the two companies will provide Park Nicollet with a converged, state of the art IPT platform.
- Schindler Elevator Corporation will rely on Verizon Business for voice and Private IP data services worldwide.
- Verizon Business serves many educational institutions around the country. During the month of September, Pasadena Area Community College District signed a two-year contract with Verizon Business to install a new campus-wide VoIP network at Pasadena City College.
About Verizon Business
Verizon Business, a unit of Verizon Communications (NYSE: VZ), is a leading provider of advanced communications and information technology (IT) solutions to large business and government customers worldwide. Combining unsurpassed global network reach with advanced communications, security and other professional service capabilities, Verizon Business delivers innovative and seamless business solutions to customers around the world. For more information, visit www.verizonbusiness.com.
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* See www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for the non-GAAP financial measures included in this announcement.
** The Magic Quadrant is copyrighted by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendor's measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.