Verizon Q2 Profits Fall, 8,000 Job Cuts to Follow

 

Verizon (News - Alert) Communications Inc. reported today that its second-quarter profits fell 7.2 percent. The company claims its second quarter fell because of higher costs and less demand among business customers in lieu of the recession.

 

Company officials also said the company would cut 8,000 jobs in its wireline business over the next 12 to 18 months, as weakness in wholesale and corporate segments overshadowed wireless growth.

 

"Clearly the broader economic issues are affecting the business," Verizon’s Chief Financial Officer John Killian told analysts on a conference call. He said delays to big telecom projects with corporate clients as well as job cuts, reduced business telephone use.

 

"We're hoping as we go further into the year we'll see some recovery in employment and in the economy," Killian told Reuters (News - Alert) in a telephone interview. But he said, "We really don't have a crystal ball.”

 

Verizon earned $1.48 billion, or 52 cents per share, in the three months ended June 30, reported the Associated Press, down from $1.88 billion, or 66 cents per share, a year ago.

 

“Verizon posted continued strong wireless revenue growth and new levels of sales success with FiOS in the second quarter," said Verizon chairman and CEO Ivan Seidenberg. "This resilience in consumer demand for our wireless, broadband and video products has again produced overall revenue growth despite cyclical impacts, especially in business markets."

 

The AP also reported that Verizon’s revenue rose 11 percent to $26.86 billion from $24.1 billion a year ago which matched expectations however, the purchase of wireless carrier Alltel (News - Alert) Corp. in January was the major reason for the increase — without it, revenue would have risen 1.9 percent.

 

Chief Operating Officer Denny Strigl told investors and analysts that he expects Verizon Wireless to stay competitive by introducing new phones, including a second version of the BlackBerry Storm and devices from Motorola Inc. running Google (News - Alert) Inc.'s Android software.

 

He also said Verizon Wireless will have Palm Inc.'s Pre phone early next year even though the phone is currently exclusive to Sprint Nextel (News - Alert) Corp.

 

Verizon’s shares fell 2.3 percent in Monday trades, to $30.82.