JANUARY 27, 2010 Verizon to Cut 13,000 Jobs, Posts Loss
By ROGER CHENG Wall Street Journal http://online.wsj.com/article/SB10001424052748703906204575026803979106926.html?mod=WSJ_Tech_LEFTTopNews Verizon Communications Inc. swung to a fourth-quarter loss as a result of heavy charges, and announced plans to cut 13,000 more jobs as executives cast a downbeat note on the economic recovery. While the New York telecommunications giant's wireless arm remained resilient in the face of lower consumer spending, its legacy wireline segment wasn't so fortunate. Verizon said there haven't been any indications of a pickup in spending on the business side, while the number of new FiOS customers disappointed Wall Street. Verizon shares lose ground after the telecom giant posts a quarterly loss stemming from one-time costs associated with layoffs. Report also weighs on telecom carriers AT&T and Quest. "The economy won't help us as much as we thought," said Chairman and Chief Executive Ivan Seidenberg, adding that he doesn't see a significant improvement until the end of the year. As a result, the company plans to shed another 13,000 jobs in 2010, roughly the same amount cut in each of the past two years. The latest represents 11.1% of its total work force of 117,000. The company reported a loss of $653 million, or 23 cents a share, compared with a year-earlier profit of $1.23 billion, or 43 cents. Excluding one-time items, among them the costs from cutting some 8,000 jobs, earnings fell to 54 cents a share. Revenue jumped 9.9% to $27.09 billion. The wireless business, however, remained strong thanks to Verizon Wireless's latest attempt to counter the popularity of AT&T Inc. and Apple Inc.'s iPhone. Motorola Inc.'s Droid, powered by Google Inc.'s Android software, saw moderate success with its holiday launch. Chief Financial Officer John Killian declined to comment on speculation that Verizon Wireless would get either the anticipated Apple tablet or the next iteration of the iPhone. "We like [Apple] and like their product, but it's their call," he said in an interview. "We won't sit around for some new device that's coming." Also contributing to the wireless strength was the company's decision to expand a reseller partnership with Tracfone Wireless Inc., which is selling cheaper wireless service through Wal-Mart Stores Inc. Verizon Wireless' decision to move into the prepaid arena through a reseller deal, as well as the recent price cut on its unlimited voice plan, which prompted AT&T to follow suit, underscored the pricing pressure the industry faces for voice service. The players are attempting to offset that decline by focusing on more expensive data plans, which allow for services such as mobile Web browsing, text messaging and video streaming. Verizon Wireless, which is jointly owned by Verizon and Vodafone Group PLC, saw revenue rise 22.5% to $15.73 billion as a result of a higher reliance on smart phones with data services. The company's turnover rate for its retail service fell to 1.06% from 1.13% in the third quarter, while total turnover fell to 1.42% from 1.49%. Over the past few months, the company has successfully exploited the perception that its network is superior to AT&T through a barrage of commercials, blunting the appeal of the iPhone. Some consumers are sticking with Verizon Wireless on the hope that the carrier will eventually get the coveted smart phone. Apple executives late Monday reiterated its confidence in AT&T's network upgrade plans. Wireline revenue, however, continued to drag on Verizon, falling 3.9% to $11.5 billion. "Today's results were eye-opening, if only because of the magnitude of the divergence," said Craig Moffett, an analyst at Sanford C. Bernstein & Co. "Wireline results were at least as weak as wireless was strong." The company has pegged its growth on its FiOS services, which include a faster Internet connection and television. In the quarter, it added 153,000 customers to both FiOS Internet and FiOS TV services, driving a 12.6% increase in its average revenue per user. FiOS TV growth, however, was down 50% from a year ago, and results were considered a disappointment. Verizon's business segment was also weak, with global enterprise revenue falling 4.5% to $3.7 billion, and wholesale revenue also falling 4.5% to $2.4 billion. Killian said he was "surprised" by the continued economic pressure. ================================================= George Antunes Voice (713) 743-3923 Associate Professor Fax (713) 743-3927 Political Science Internet: antunes at uh dot edu University of Houston Houston, TX 77204-3011 *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
