updated 09:40 am EST, Tue January 26, 2010
Verizon blames layoffs for slump
Verizon today surprised the industry by reporting an uncommon loss for its fall 2009 quarter. The telecom giant lost $653 million compared to a $1.23 billion profit just a year earlier even though its cash flow and subscribers were positive. Much of the drop is blamed on roughly $3 billion in layoff costs that had been meant to stem expected losses.
Most of the cuts came to the wired business, which like with most other US carriers is shrinking rapidly as customers move to cellphones or consolidate all their usage around all-in-one services like FiOS.
The company's position in the wireless industry according grew stronger during the period. It added 2.2 million new customers and has tentatively held off AT&T for the lead by reaching a total 91.2 million customers, a jump of 26.6 percent compared to just a year earlier. Some of this was helped by the Alltel merger at the start of 2009.
Much of this may have stemmed directly from the launch of the Motorola Droid in early November; the Android flagship helped spike data revenues by 45.9 percent even compared to the launch of the BlackBerry Storm in fall 2008. The average revenue from retail data also went up 16.1 percent, and the company kept one of the lowest churn (customer turnover) rates in the US at 1.06 percent.
Other phones, like the BlackBerry Storm2, BlackBerry Curve 8530 and Samsung Omnia II also played into the increased data use, though these are all known to have mustered significantly lower sales. Verizon publicly downplayed the three by giving them relatively little marketing and, in the BlackBerries' cases, launching them at the same time as the Droid and Droid Eris.
AT&T is expected to show better fiscal health when it reports its quarterly results this Thursday, but its results will hinge on how many of the 8.7 million iPhones sold worldwide were sold in the US as well as whether it could retain customers with other devices and in spite of ongoing network issues.