Brian.oco 0 Posting Whiz

I was going to write that the Q2 quarterly numbers (not just in the tech sector but across the board) were better than most experts predicted.

For the most part, that’s true. U.S. companies have performed fairly well for the past quarter, thanks especially to increased sales overseas and a boost from the taxpayer stimulus packages that went out last spring. So far, 61 percent of the Standard & Poor's 500 index companies reporting results so far have surpassed projections, and 72 percent of them were able to top last year's sales figures.

What’s killing the market right now, which dropped 240 points today, is the financial sector. The International Monetary Foundation issued a report today that a bottom for financials is “nowhere in site”. That scenario stiff-arms investors who might otherwise invest in banks, brokerages and lenders, but won’t do so until the credit picture crystallizes and the housing market (which is tied tightly to the financial sector) starts rising again.

But, if you pull financials out of the overall quarterly earnings picture, you see a vibrant, healthy corporate growth environment that should outpace 2007’s growth rate by 10%, according to Standard & Poors.

"Regardless of the estimates or hype, a double-digit gain from non-financials is impressive -- in any economy," said Howard Silverblatt, S&P's senior index analyst.

Verizon is the latest tech gitant issuing a rosy Q2 review – it reports revenues growth at 12% for the quarter. Verizon is the U.S.’s second-biggest telecom firm and is battling AT&T for market supremacy. For the quarter, Verizon earned $1.88 billion, or 66 cents per share, in the quarter ended June 30, up from $1.68 billion, or 58 cents per share, a year ago. Verizon said that it earned 67 cents a share, beating the average estimate of analysts polled by Thomson Financial by 2 cents. Revenue rose 3.7 percent to $24.1 billion from $23.27 billion a year ago. Thomson says analysts expected $24.2 billion.

Verizon didn’t get much of a bounce from its Q2 numbers, with its stock dropping by 85 cents for the day, probably a victim of the larger overall sell-off. The only bad news, and I’m not even sure this qualifies for bad news, is that landline subscribers are leaving Verizon in larger number. It’s lost 11.4% of landline customers versus 10.9% at the same time a year ago. But the company’s internal research says that these same customers are staying in the fold, choosing to move to wireless phones in larger numbers. Some may leave for cable or Internet telephones, but that’s not happening in large numbers yet.

All told, the company added 1.5 million wireless subscribers to its Verizon Wireless unit, for a total of 68.7 million. The customers that should, in theory, be leaving Verizon for Apple and AT&T for the new iPhone, aren’t doing so, at least not from Verizon. The company says that most of the new iPhone buyers are coming from other carriers like Sprint Nextel. That’s a good indicator that Verizon is keeping wireless customers in house. For the short-term, at least, at $33 per share, Verizon is worth a closer look.

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