Verizon to cut 13,000 jobs; earnings miss estimates

By Amy Thomson
Bloomberg News / January 27, 2010

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NEW YORK - Verizon Communications Inc., coping with subscriber losses at its fixed-line phone business, plans to cut about 13,000 jobs at the division this year after posting fourth-quarter revenue that missed analysts’ estimates.

The cuts will follow reductions of a similar size last year, chief financial officer John Killian said on a conference call yesterday. This year’s eliminations equal to 11 percent of the staff at the unit, which had about 117,000 workers at year-end.

Sales rose 9.9 percent to $27.1 billion, missing the $27.3 billion average of estimates compiled by Bloomberg. Fixed-line revenue fell 3.9 percent, muting mobile customer gains that beat some analysts’ projections. High unemployment hurt sales to companies and damped growth at Verizon’s FiOS Internet and TV service, said Stifel Nicolaus & Co. analyst Christopher King.

“The economy, first and foremost, we really see no signs of improvement there,’’ said Baltimore-based King.

Verizon had a pretax expense of $3 billion last quarter related to job cuts, pushing it to a net loss of $653 million, or 23 cents a share. A year earlier, it had a profit of $1.24 billion, or 43 cents. Excluding some costs, profit fell to 54 cents a share, matching analysts’ projections.

Sales to global enterprises declined 4.5 percent from a year earlier. The company has said that its fixed-line unit will recover alongside the unemployment rate, which reached a 26-year high in October, according to Labor Department data.

Earlier this month, Verizon said 2009 earnings per share fell as much as 15 cents, signaling that fourth-quarter profit missed analysts’ original estimates. The company coped with a higher pension expense and subsidized phones for new customers.

Verizon is focused on building up the wireless business, which accounts for more than half of revenue. The company is adding new devices and cutting prices for some plans to encourage customers to buy subscriptions for data use. Verizon is the largest US wireless-phone carrier and is second to Dallas-based AT&T Inc. in total phone customers.