Verizon Communications (VZ Free Verizon Stock Report), the telecommunications giant and Dow-30 component, has reported March-quarter earnings of $0.84 a share, a penny below our estimate but a hefty 24% improvement on the year-earlier result, on a solid 4.8% revenue advance. The stock traded modestly lower on the news, as investors seemed to expect an even stronger operating performance.

The company looks a bit different than it did this time last year. In late February, Verizon acquired Vodafone's (VOD) 45% indirect interest in VZ Wireless in a transaction valued at $130 billion. The deal, which provided Verizon with 100% ownership of the industry-leading wireless carrier in the United States, has proven to be immediately accretive to VZ's bottom line.

The company has now delivered double-digit earnings growth in eight of the past nine quarters, and in the March period, VZ reported its strongest revenue growth in five quarters. As usual, Verizon Wireless was responsible for the lion's share of the good news. During the first quarter, VZ Wireless added 539,000 retail postpaid net subscribers, bringing Verizon's total number of retail connections to 103.3 million, up 4.4% from the year-earlier figure.

However, it must be noted that the number of new net subscribers dropped 20.4%, when compared with the 677,000 subscribers added during the same period last year. Nevertheless, total Wireless revenues came in at $20.90 billion, up 6.9% year over year, thanks to a 6.3% uptick in retail postpaid ARPA (average revenue per account). Last year, Verizon Wireless started to report ARPA instead of ARPU, following the rollout of the Share Everything Plan and as customers continued to add multiple devices to their accounts.

What's more, at the end of the first quarter, smartphones accounted for just over 72% of the Verizon Wireless retail postpaid customer phone base, up from 70% at the end of 2013. As we typically point out, any improvement in this metric definitely augurs well for ARPA growth going forward, as smartphone users usually pay additional data-related fees.

Finally, wireless operating income margins have rebounded strongly over the 18 months or so, after coming under a significant amount of pressure in 2012, due to the introduction of the iPhone, which came with a rather hefty handset subsidy. To wit, the operating income margin came in at 35.0%, up 210 basis points from the year-earlier figure.

Verizon Wireline's performance has certainly taken off of late, with year-over-year quarterly revenues growing more than 4% for seven consecutive quarters. During the March term, consumer revenues came in at $3.8 billion, which works out to a 6.2% year-over-year increase, with most of the good news coming from the company's FiOS service. Representing 74% of total consumer revenues, FiOS revenues grew 14.6% year over year, with total quarterly FiOS revenues surpassing the $3-billion mark for the first time. Verizon added 98,000 new FiOS Internet connections and 57,000 new FiOS video subscribers, bringing FiOS Internet totals to 6.2 million subscribers and FiOS video totals to 5.3 million subscribers.

Investors should keep in mind that March-quarter results only represent five weeks of full Verizon Wireless ownership, and if it has had 100% ownership of Verizon Wireless for the entire quarter, earnings would have come in at $0.91 a share. Therefore, we remain confident in our $3.50-a-share earnings estimate for this year, with almost a 30% jump in share net in the cards for next year. High-quality Verizon stock remains a quality choice for income and total return potential.

About The Company: Verizon Communications was created by the merger of Bell Atlantic and GTE in June of 2000. It is a diversified telecom company with a network that covers a population of about 290 million and provides service to nearly 91.2 million. In the last few years, has acquired MCI (1/06) and Alltel (1/09). The company is also the largest provider of print and on-line directory information. Has a wireline presence in 28 states & Washington, D.C. and a wireless presence in every U.S. state & D.C., as well as operations in 19 countries.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.