Verizon Communications Inc. (VZ) is bracing for a substantial financial impact in the third quarter, primarily due to its previously announced voluntary separation program. The company expects to book a severance charge ranging from $1.7 billion to $1.9 billion. This cost is directly linked to Verizon’s decision to reduce its workforce by 4,800 employees by the end of March 2025, with over half of these departures scheduled for September 2024.
Beyond personnel costs, Verizon will also incur asset and business rationalization charges of $230 million to $380 million in the third quarter. These charges stem from the company’s plan to discontinue certain real estate assets and divest itself from non-strategic parts of its business.
Despite these restructuring efforts, Verizon’s recent financial performance shows signs of continued growth. In July, the company reported a 0.6% increase in revenue to $32.8 billion, although this fell short of analyst expectations. However, Verizon’s broadband subscriber base grew significantly, reaching 11.5 million, representing a 17.2% increase. The company also exceeded analyst forecasts for postpaid phone net additions, adding 148,000 new subscribers compared to the consensus estimate of 118,000.
In a recent move to bolster its fiber and wireless services, Verizon agreed to acquire Frontier Communications Parent, Inc (FYBR) for $20 billion.
Over the past year, Verizon’s stock has seen a notable surge, climbing 28%. Investors seeking exposure to Verizon can explore ETFs like the Invesco Dow Jones Industrial Average Dividend ETF (DJD) and SPDR Series Trust SPDR Portfolio S&P Sector Neutral Dividend ETF (SPDG).
As of Thursday, VZ stock was down 0.15% at $43.68.
