Update: Verizon to cut 8,000 jobs

Q2 net income down on wireline performance

Verizon Communications said it would cut about 8,000 employee and contractor jobs in the second half of the year to offset decreased income in its wireline business.

Verizon's revenue rose 1.9%, but net income dipped 2.8% in the second quarter of 2009 compared to a year earlier, with the company's traditional wireline income taking a big dive.

Verizon today reported revenue of $26.9 billion in the second quarter, compared to $26.4 billion in the second quarter of 2008. Net income was down from $5.2 billion to $5 billion. Those numbers are adjusted to account for Verizon's acquisition of AllTel in January.

Adjusted earnings per share for the second quarter were 63 cents, meeting analyst expectations, according to Thomson Reuters.

The 8,000 job cuts announced come after the company cut another 8,000 jobs over the past year, officials said. Verizon currently has about 235,000 employees.

Verizon's wireline business drove the decline in net income. The company saw net income of $1.1 billion in the second quarter of 2008, but only $555 million in the second quarter of 2009. Wireline revenue was down 5.2% to $11.5 billion. Global enterprise and global wholesale revenues were down, the company said in a press release.

The continued recession has hurt Verizon's business markets, said John Killian, the company's executive vice president and chief financial officer. "These adverse effects are primarily in volume-drive products, most notably voice," he said during a conference call.

Continued high unemployment numbers are driving down demand for business services, and many CIOs are delaying new telecom spending, he added.

But Killian said he was optimistic about the future. "We've not lost any major customers, and we've been successful in terms of new contacts," he said. "We're encouraged by that."

Broadband connections, however, grew by 9.4% in the quarter. Verizon reported serving 9.1 million broadband customers at the end of the quarter, a net increase of 186,000 from the first quarter. Verizon's DSL (digital subscriber line) connections decreased by 117,000 during the quarter, but those losses were offset by 303,000 new Fios fiber-based broadband customers.

Verizon also reported 300,000 new Fios television customers during the quarter.

Verizon's wireless division also reported customer increases.

The company now has 87.7 million wireless customers, with 1.1 million net additions during the quarter. Wireless revenue rose from $14.4 billion in the second quarter of 2008 to $15.5 billion this past quarter and net income rose from $4 billion to $4.5 billion.

Verizon's wireless revenue growth was "strong," Chairman and CEO Ivan Seidenberg said in a statement. He attributed the overall revenue growth to "resilience in consumer demand for our wireless, broadband and video products."

Copyright © 2009 IDG Communications, Inc.

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