Verizon to layoff nearly 5,000 employees while writing off close to $2 billion during Q3
Verizon is about to make a big move that will result in a pre-tax write-off of as much as $1.9 billion in severance pay during the third quarter. The headcount will shrink as 4,800 employees leave the telecom giant by next March. Last February Verizon submitted a filing in which it claimed 105,400 full-time employees (89% of whom work in the U.S.). That means that the layoffs will result in a 4.5% reduction in full-time workers.
Verizon also has some ongoing cost savings initiatives that will result in the company no longer using certain offices while leaving "non-strategic portions" of certain businesses. Some of the pre-tax charges that Verizon will take during the third quarter will amount to $230 million to $380 million, or $170 million to $290 million after tax.
FactSet says that analysts it polled are calling for Verizon's Q3 adjusted earnings, to be announced in mid-October, to come in at $1.18 per share on revenue of $33.7 billion. That compares to the same quarter in 2023 when Verizon reported revenue of $33.3 billion and earnings of $1.08 per share.
Earlier this month Verizon announced that it would purchase Frontier Communications in an all-cash deal valued at $20 billion. The acquisition expands the company's Fios fiber internet service to 22 new states. Frontier’s 2.2 million fiber subscribers in 25 states will join the 7.4 million Verizon Fios connections in 9 states and Washington, D.C.
So far this year Verizon's shares are up 15% which underperforms the 16% rise reported by the S&P 500. Verizon's shares closed on Thursday at $43.86 after hitting a new 52-week high at $43.88 during the day. The stock's 52-week low was $30.14. The telecom company now has a valuation of $184.63 billion compared to the $236.17 billion valuation of T-Mobile and AT&T's valuation of $154.81 billion. Verizon's aforementioned 15% gain for 2024 places it a distant third behind T-Mobile's shares, (up 25.1% in 2024 to date) and AT&T (up 25.2% for the year).
This is a busy time of the year for U.S. wireless firms what with pre-orders being rung-up for the iPhone 16 series starting today. The carriers offer various deals for the new handsets which will officially go on sale September 20th.
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