Verizon to shed about 7,000 jobs
Verizon and Verizon Wireless have 10,000 and 11,000 employees in the Tampa Bay region, but the local impact is unknown.
By wire services
Published January 27, 2006
NEW YORK - Verizon Communications Inc., which bought MCI Inc. this month to gain corporate clients, plans to cut about 7,000 jobs over three years, primarily from its business division, an executive of the New York-based company said Thursday.
The telephone company's chief financial officer, Doreen Toben, also said pension and other retirement benefit costs will reduce 2006 profit by 34 to 36 cents a share. The costs hurt 2005 profit by 30 cents a share and 2004 profit by 21 cents. Verizon's fiber initiative will cut profit 15 cents this year, compared with 4 cents in 2005.
Verizon and Verizon Wireless employ between 10,000 and 11,000 people in the Tampa Bay region, according to Verizon spokesman Bob Elek in Tampa. But no details on the job-reduction plan have been received here yet.
News of the cuts came as Verizon said it earned $1.7-billion, or 59 cents per share, in the last three months of 2005, down from $3-billion, or $1.08 a share, a year ago, when results were boosted by the sale of Canadian assets and a tax gain.
New customers at Verizon Wireless boosted revenue to $19.3-billion, up 5.8 percent from $18.3-billion in the fourth quarter of 2004.
The latest earnings were reduced by $59-million because Verizon stopped contributing to its pension plan for managers, partly compensating them with an 18-month enhancement to the plan. When announcing the move in December, the company said it would cut costs by $3-billion over 10 years.
Verizon shares rose 30 cents, or 1 percent, to close at $31.68 on the New York Stock Exchange. The stock is down about 8 percent from a year ago.
Verizon Wireless added a net 2-million cell phone subscribers in the quarter, ending the year with 51.3-million subscribers. Verizon Wireless' average monthly service revenue was $49.36 per customer, down 1.9 percent from a year ago. Analysts had expected the number to decline due to price cuts and the popularity of family plans.
Vodafone hinted this week that it would consider selling its stake in Verizon Wireless for the right price. The British company has been under pressure to cash out of the successful venture to boost a flagging stock price.
On a conference call to discuss the earnings results, Verizon chief executive Ivan Seidenberg said Vodafone had given no direct indication that its position has changed.
Seidenberg said money from the planned sale of Verizon's directories business could go toward paying Vodafone.
Verizon announced in early December that it was looking to sell the phone book and online directories service. A price tag wasn't announced, but estimates range in the billions of dollars.
Seidenberg said Thursday that there are many ways to spend the money. Apart from increasing its stake in Verizon Wireless, the company is looking primarily at paying down debt or returning money to shareholders through, for example, a buy-back.
"We're moving full steam ahead with our bankers" on the deal, Toben said. She still expects to announce a buyer this year, but had no further details.
Verizon's land-line business continued to decline. It served 49-million lines at the end of the year, down 6.7 percent from 52.3-million the year before. However, average revenue per customer rose 3.9 percent to $51.50 due to the demand for extra services.
The company has started replacing the copper wires leading into homes with fiber-optic cables. The FiOS fiber network is now available to 3-million homes and businesses.
Verizon's full-year earnings were $7.4-billion, or $2.65 a share, on revenue of $75.1-billion. Earnings in the previous year were $7.83-billion, or $2.79 per share, on revenue of $71.3-billion.
Verizon's $8.5-billion acquisition of MCI closed Jan. 6., so its results were not reflected in the report. Verizon said its integration into a new unit named Verizon Business was going well.
Times staff writer Dave Gussow contributed to this report.
[Last modified January 27, 2006, 01:29:04]
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