Verizon’s quarterly earnings drop 50%

NEW YORK — Verizon Communications Inc.’s earnings fell 50 percent in the first quarter as employee buyouts increased expenses for the country’s largest phone company.

Verizon, which has its Northwest regional office in Everett, said Tuesday it earned $1.2 billion, or 43 cents a share, for the January-March period, down from $2.4 billion, or 87 cents a share, a year ago.

One-time expenses cost 15 cents a share, most of which went toward early retirement packages for some of the 21,000 employees who left the company’s payroll in the fourth quarter of 2003 as part of the company’s voluntary buyout program.

The packages cost $447 million in the first quarter, and Verizon expects to spend about $250 million more on them before the year ends, chief financial officer Doreen Toben said. The buyout was designed to help accelerate cost-cutting in the company’s shrinking residential telephone business.

Excluding one-time items, the company would have earned 58 cents a share, beating by 1 cent the average estimate by analysts surveyed by Thomson First Call. Excluding a one-time accounting gain a year ago, the company would have earned 69 cents a share.

Revenue increased 3.9 percent to $17.1 billion from $16.5 billion a year ago as Verizon Wireless added 1.4 million customers.

Shares in Verizon fell 46 cents to $37.28 in afternoon trading on the New York Stock Exchange.

"A lot of people assumed they could offset access-line losses with increased revenue per user," said Patrick Comack, an analyst at Guzman &Co. "Verizon’s got to find a way to increase revenue per user more than they are."

Domestic telecom revenue from the company’s land-line business dropped 3.3 percent to $9.6 billion. The company has been counting on increased revenue in long distance, DSL and wireless to offset the losses in local wireline service.

"While domestic telecom revenues were down, we recognize that this is part of the evolution of our business model, and we are on track with where we want to be," said Ivan Seidenberg, Verizon’s chairman and chief executive.

The number of Verizon Wireless customers was up 66.5 percent from last year’s first quarter. Revenue in that division grew 21 percent to $6.2 billion.

"Wireless is the huge growth engine at Verizon," said Anthony Ferrugia, a telecom analyst at A.G. Edwards &Sons. Inc. "Verizon Wireless in the wireless industry is like Tiger Woods in golf."

Copyright ©2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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