Verizon is to cut 8,000 jobs by the end of the year, as it reported a 21% decline in profits.
The telecoms firm made the jobs announcement as it said revenue rose 1.9 percent, but net income dipped 2.8 percent in the second quarter of 2009 compared to a year earlier, with the company's traditional wireline income taking a big dive.
Verizon on Monday reported revenue of US$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 $0.63, meeting analyst expectations, according to Thomson Reuters.
Verizon plans to cut about 8,000 employee and contractor jobs in the second half of the year to offset decreased income in its wireline business. 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 percent 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 percent 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.
However, the firm does not fully own Verizon Wireless, as Vodafone holds a 45% stake.
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."
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