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Verizon Wireline Job Cuts Drag on Q4

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
1/26/2010

Verizon Communications Inc. (NYSE: VZ) posted a net loss for its fourth quarter today, even as its part-owned Verizon Wireless unit announced that it had added more than 2 million new mobile subscribers for the last three months of 2009.

New York City-based Verizon Communications reported a net loss of $653 million for the fourth quarter of 2009, or $0.23 a share, compared with a profit of $1.24 billion, or $0.43, 12 months ago. The operator said it had a pretax expense of $3 billion related to workforce reductions in 2009. Excluding costs, profit fell to $0.54 a share, which met the expectations of analysts polled by Bloomberg.

"Our fourth-quarter earnings reflect costs to re-size and simplify our wireline business," Verizon Communications CEO Ivan Seidenberg said. The company now says that it expects to cut 10,000 positions this year in its fixed-line business.

Overall revenue for Verizon Communications jumped 9.9 percent to $27 billion in the quarter. For the year, Verizon reported a profit of $10.4 billion on revenues of $107.8 billion. This compared with a profit of $12.6 billion on revenues of $97.4 billion in 2008.

Wireless strength
Basking Ridge, N.J.-based Verizon Wireless, meanwhile, added 2.2 million new subscribers over the fourth quarter, compared to 1.2 million in the same quarter the year before. This handily beat the estimates of analysts polled by Thomson Reuters , who had predicted that Verizon would add 1.5 million subscribers during the final three months of last year. Of the new customers, 1.2 million came from retail adds, while a further 1 million were added through reseller channels.

The CDMA operator says it is now serving 91.2 million subscribers, a 26.6 percent increase from 2008.

Verizon Wireless, which is jointly owned by Verizon Communications and U.K.-based Vodafone Group plc (NYSE: VOD), posted total revenues of $15.7 billion, up 22.5 percent year-over-year.

Cellular customer spend, however, showed a mixed picture. In the fourth quarter, Verizon says that data revenues were 31.9 percent of all service revenues, up from 26.5 percent from the fourth quarter of 2008. Overall, however, wireless average revenue per user (ARPU) fell 2.2 percent from the previous year, to $50.75.

Verizon introduced its first flagship smartphone based on the Android operator system in the fourth quarter, the Motorola Inc. (NYSE: MOT) Droid. More Android-based phones are expected in 2010. (See Verizon's Attack of the 'Droids.)

A conservative FiOS approach?
Verizon added 153,000 new high-speed broadband homes in the fourth quarter. This gives the operator 3.4 million FiOS Internet customers and 2.9 million total FiOS TV customers overall. (See FiOS: No Longer a High Flyer? for more.)

Wireline operating revenue for the fourth quarter dropped by 3.9 percent from last year to $11.5 billion as the operator continues to lose wired voice customers. The company also reported that it lost 107,000 DSL subscribers last quarter, as customers upgraded to either FiOS or cable.

— Dan Jones, Site Editor, Unstrung

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