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1/29/2004
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Buyouts Hurt Verizon's Bottom Line

It lost $1.4 billion in the fourth quarter due to the costs of buying out 21,000 employees, overshadowing the fact that it added 1.5 million customers to its market-leading customer base.

NEW YORK (AP) -- Verizon Communications Inc. lost $1.46 billion in the fourth quarter as it shouldered nearly $3 billion in one-time expenses to eliminate 21,000 jobs in a voluntary buyout.

The loss of 53 cents per share in the October-December period by the nation's largest telephone company overshadowed another powerful quarter for Verizon Wireless, which added a record 1.5 million customers to its market-leading customer base.

Excluding $2.9 billion in costs from the previously disclosed buyout, an aggressive bid to slash costs in a brutally competitive industry, and other one-time expenses, Verizon earned $1.60 billion, or 58 cents per share, in the final three months of 2003. In the same period a year earlier, Verizon earned $2.29 billion, or 83 cents per share.

Wall Street had expected operating profits of 56 cents per share, according to a survey of analysts by Thomson First Call.

Cellular offered the one clear bright spot, as the quarter brought more of the steady give-and-take between local and long-distance phone companies, with Verizon and rivals such as AT&T continuing to grab sizable shares of each others' traditional customers.

Fourth-quarter revenue totaled $17.28 billion, up slightly from $17.15 billion in the fourth quarter of 2002.

At Verizon Wireless, 45 percent owned by Vodafone PLC of Britain, revenues grew 14.6 percent to $5.98 billion. The customer gains, which exceeded analyst forecasts of 1.3 million, gave Verizon Wireless a total of 37.5 million--about 50 percent more than No. 2 Cingular Wireless.

In a conference call, Verizon chief executive Ivan Seidenberg noted the recent media reports that Vodafone is mulling an offer in the bidding to acquire AT&T Wireless.

"We certainly would not shy away from owning 100 pct of Verizon Wireless," Seidenberg said. Either way, he added "We see consolidation of the wireless industry as a very healthy development."

Revenues from local phone service declined 1.7 percent to $4.83 billion as Verizon lost another 380,000 customers to rivals such as AT&T, MCI, and Sprint, who are entitled to lease Verizon's lines under controversial federal rules designed to fuel competition. There are now 5.76 million customers who buy local phone service from another company using Verizon's lines.

At the same time, Verizon added 736,000 long-distance lines in the fourth quarter, ending the year with more than 16.6 million, up 33.3 percent from the end of 2002. Revenues from long distance grew by 1.01 billion, up 29.5 percent from a year earlier.

Subscribers to high-speed DSL Internet service grew by 203,000 in the quarter for a total of 2.3 million.

For all of 2003, Verizon earned $3.08 billion, or $1.11 per share, including $4.2 billion in one-time charges, on revenue of $67.75 billion. In 2002, Verizon earned $4.08 billion, or $1.49 per share, with revenue of $67.30 billion.

Total debt decreased to $45.4 billion at year-end 2003, compared with $53.3 billion at year-end 2002.

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