SEC filing details charges for buyout, plus a $4.6 billion hit as Oath flounders
Verizon will buy out about 10,400 management employees at a cost between $1.8 billion to $2.1 million and about half of them will leave the company this month, according to a company press release and filing with the U.S. Securities and Exchange Commission.
Verizon said the voluntary buyout, which was announced in September, is part of its efforts to “better [position]itself for future growth” and noted that it “coincides with Verizon’s recently announced realigned organization structure designed to optimize growth opportunities in the 5G era.”
As of January 1, Verizon will officially reorganize into three business segments: Verizon Consumer Group, Verizon Business Group and Verizon Media Group. (More details on the reorganization in this story.)
Verizon said that about 10,400 U.S. employees were accepted into the voluntary buyout and that they were notified yesterday of their end-dates with the company. All of those who took the buyout will leave the company by the end of June 2019, but nearly half of them are exiting the company this month.
Verizon reported in its SEC filing that the buyout means it will record a severance charge of between $1.8 billion to $2.1 billion in its results for the fourth quarter of 2018.
“These changes are well-planned and anticipated, and they will be seamless to our customers,” said Verizon CEO Hans Vestberg in a statement. “This is a moment in time, given our financial and operational strength, to begin to better serve customers with more agility, speed and flexibility.”
Verizon will take a $4.6 charge on Oath
Verizon also said in its SEC filing that its Oath business has lost market position, to the point that it will take a $4.6 billion charge on its fourth-quarter earnings.
A five-year strategic planning review for Oath’s business prospects resulted in “unfavorable adjustments” to its financial projections, Verizon said, resulting in the charge. During its most recent quarterly earnings, Verizon acknowledged that Oath would not meet its original goal of $10 billion in revenues by 2020; the Oath unit’s third quarter revenues were down almost 7% from the same period last year.
Oath, Verizon said, “has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses.”
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