Verizon Posts Net Loss of $653M, Citing Charge Related to Layoffs

Even with the success of the Motorola Droid, Verizon had a tough fourth quarter.

2009 was a bad year for many businesses with cost cutting measures resulting in significant layoffs for many of the largest tech firms in the world. The economy is starting to come back, but despite the slight rebound, many companies are not expecting a boom in 2010.

Verizon Communications reported its Q4 earnings this week and overall they were what analysts expected. Verizon also stated that it plans to cut an additional 13,000 jobs from its fixed line business this year, which works out to about 6% of the global workforce. Verizon blames the needed cuts on weak corporate spending that is hurting its landline business.

Verizon CEO Ivan Seidenberg said at an analysts meeting, “We’re facing more significant headwinds than we’d thought we’d face.”

Seidenberg promised analysts that Verizon would focus in 2010 on improving profits in fixed line businesses. In 2009 Verizon cut a total of 17,000 jobs and severance charges related to the layoffs gobbled up a portion of the revenue and profit for Verizon. For the quarter, Verizon posted a net loss of $653 million working out to 23 cents per share. In the same quarter of the previous year, Verizon posted a net income of $1.24 billion.

The total charges Verizon took relating to reducing its workforce amounted to $3 billion. The company would have earned 54 cents per share had the workforce reduction costs not been figured in. Overall revenue for the company was $27.1 billion. While the fixed line business at Verizon is struggling, the Verizon Wireless division is doing well. Verizon Wireless added 2.2 million customers during the quarter. Reuters reports that much of that growth can be attributed to the mass marketing of the Motorola DROID smartphone.

Analyst Christopher Larsen from Piper Jaffray said, “It was a solid quarter but not great. Retail wireless subscribers were in line with expectations. Wholesale was meaningfully ahead but they tend to be lower value customers.”