Employee layoffs and asset divestitures cost Verizon Communications Inc. big in the second quarter, pushing earnings to a $198 million loss. Thats down from $1.48 billion in profit a year earlier.
Analysts were expecting a drop in income because of the severance packages, but without those expenses, Verizons figures beat Wall Streets hopes. However, revenue came in lower than analysts had predicted. Sales slipped 0.3 percent to $26.8 billion because of the new way in which it accounts for wireless data plans. If that hadnt changed, Verizon would have reported 0.7 percent revenue growth.
Wireless, of course, made up most of Verizons second-quarter sales. Even without the iPhone, the company added 665,000 new postpaid customers, more than rival AT&T. Verizon has been attracting users to its Google-powered handsets, its answer to the iPhone, as well as to plans offered through reseller and wholesale channels.
But the wireline division is a different story. Verizon continues to lose ground, as all operators have, among home-phone customers, and thats where its layoffs have been taking place. To that end, the company expects 11,000 to accept buyouts, which come with a one-time, $50,000 bonus for union workers. Two-thirds of the workers to whom Verizon has offered buyouts left the company by early July. The carrier now has 210,800 workers, 24,500 fewer than a year ago.
Finally, Verizons losses also stemmed from asset sales. The company sold landline properties to Frontier Communications in the quarter, while also shedding Alltel and Atlantic Tele-Network resources as a regulatory requirement for buying Alltel.
Shares of Verizon were trading 4.04 percent higher, reaching $28.09, by 11:35 a.m. Eastern.