Verizon is currently in the midst of a cost-cutting and internal reorganization strategy that includes the layoff of approximately 5,000 employees in the coming months. However, many of them will leave the company soon. The company is looking to make its operations more efficient and profitable than they are now. The carrier also recently confirmed its intention to acquire Frontier.
In February, Verizon had about 105,400 full-time employees, of which 84% reside in the US. In June, Verizon began a voluntary separation program with incentive payments to encourage employees in certain sections to leave the company. The carrier wants to achieve a reduction of 4,800 employees, which represents 4.5% of its full-time workforce.
Verizon to begin the layoff of about 5,000 employees this month
Of the almost 5,000 employees laid off, half will leave the company in September, while the rest will leave their positions in March 2025. Verizon reportedly estimates that it will face charges of between $1.7 billion and $1.9 billion in severity payments from the voluntary separation program. That translates to between $1.3 billion and $1.4 billion after taxes. This big charge corresponds only to Q3 2024, for the payouts of staff leaving the company this month, so you can expect a similar one next March.
In addition to the layoffs, the company’s cost-cutting strategy includes leaving “non-strategic portions” of certain businesses. However, Verizon did not offer more specific details on which businesses are considered non-strategic. The mobile carrier is also undergoing an internal reorganization (or business rationalization). The latter will result in an additional charge of $230 million to $380 million ($170 million to $290 million after-tax) for Q3 2024.
Verizon’s stock growth fell short of expectations
S&P 500 estimates had called for 16% growth in Verizon’s stock for this year. However, the company has fallen slightly short of expectations with 15% year-to-date. In comparison, T-Mobile and AT&T stocks are up 25.1% and 25.2% over the same period, respectively. Verizon’s reported earnings for Q3 2023 are $1.08 per share on sales of $33.3 billion.
It’s noteworthy that this will be a busy time for telecom companies and the mobile tech industry in general. The iPhone 16 series will hit stores on September 20, so thousands of customers are already contacting their carriers to secure a unit.