Verizon Posts $653 Million Loss In 4Q

The company said it took a major hit from costs related to layoffs in its landline division, but saw growth in its wireless business.
The pluses and minuses of modern telephony -- wireless growth, landline shrinkage -- were in full evidence Tuesday as Verizon Communications announced a major loss in its fourth quarter caused largely by layoffs in its landline business. However, its Verizon Wireless unit announced significant gains in subscribers and revenue.

The company lost $653 million in the quarter, versus last year's fourth-quarter $1.24 billion gain. Verizon reported a charge of about $3 billion for severance and other items connected to layoffs. Ivan Seidenberg, chairman and CEO, appeared to be preparing the wireless unit -- which is 45% owned by Vodafone Group -- for the future.

"In last year's turbulent economy, we took significant steps to strengthen Verizon going forward," Seidenberg said in a statement. "We focused on expanding wireless data and set the stage to deploy a nationwide 4G network later this year. We also expanded the scale of FiOS and our global IP network. We saw growth in all these areas in 2009, and we expect continued growth in 2010 and beyond, with a goal of delivering long-term shareowner value."

Verizon Wireless added 2.2 million customers, pushing its industry-leading subscriber base to 91.2 million. Most new sign-ups were valued post-paid customers, but about 1 million were pre-paid sign-ups acquired from resellers.

The wireless operation is in a mano a mano battle with AT&T and its coveted Apple iPhone. AT&T is scheduled to announce its financial report Thursday -- a day after Apple is expected to unveil its long-rumored tablet. If Verizon gets rights to an Apple device -- still a big "if" -- it would likely intensify the competition between the two industry giants.

Verizon reported strong results for its smartphones -- particularly for BlackBerry and Google Droid handsets. Verizon said it added 153,000 new FiOS landline broadband sign-ups. That number was well below the sign-ups that analysts had been expecting, however.

In one measure to streamline its landline operations, Verizon said it was proceeding with plans to spin off landlines in several states to Frontier Communications. Previously Verizon has spun off landline operations in northern New England states and in Hawaii, but the acquiring companies have had to file bankruptcy proceedings.

The company is betting heavily on its 4G LTE network planned for deployment later this year. The company released some additional information on the network in its report Tuesday.

Verizon said the LTE network "ultimately will connect a full range of electronics and machines and enable a new class of services such as online gaming, media sharing, and video entertainment." The company plans to launch the 4G network in 25 to 30 markets later this year and to cover its entire current 3G network by the end of 2013.

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