Verizon to Cut Up to 5,000 Jobs

Solid gains in its wireless unit helped Verizon Communications Inc. overcome a sagging wireline business and post second-quarter earnings of $338 million. But it was not enough to stop the company from announcing plans to cut as many as 5,000 jobs by the end of the year.

The nation’s largest local telephone company said the cuts will come from a combination of management firings, voluntary departures, retirements and normal attrition in the wireline business, which has 154,000 employees. About one-third of its workers are threatening to go on strike Saturday over disagreements on health benefits and job security.

Verizon executives said they did not know how many of its 13,000 wireline workers in California would be affected by the cuts. The company already had eliminated 18,000 jobs companywide in the previous 12 months, but said it would reinstate 3,400 workers under an arbitration ruling.

Verizon’s earnings, amounting to 12 cents a share, contrasted with last year’s second-quarter loss of $2.1 billion, or 78 cents a share. Sales rose slightly to $16.8 billion.

The earnings were propelled by the Verizon Wireless unit, which added 1.2 million customers in the second quarter to give it 34.6 million customers. The nation’s largest cellular operation, which counts Southern California as its biggest market, far outdistanced its competitors.

Verizon lost 2.2 million lucrative local access lines in the last year, a 3.7% decline, as customers dropped extra lines, changed carriers and switched to wireless phones. But it picked up nearly 4 million less-profitable long-distance lines in the same period, a 36.1% increase.

Earnings included one-time charges of $1.6 billion for the sale of Verizon’s Mexican wireless unit and for severance, pension costs, other benefits and debt redemption. Without the charges, the company earned 69 cents a share, a penny ahead of what analysts expected, according to Thomson First Call.

Verizon is California’s second-largest local phone company, with 4.6 million residential and business lines. California is Verizon’s fourth-largest market among the 31 states it serves.

Partly on fears of a strike and a reduced earnings forecast next year, Verizon shares fell 58 cents to $35.40 on the New York Stock Exchange.

Also Tuesday, Verizon and WorldCom Inc. won approval from a U.S. court for a settlement that would have the phone company pay Verizon $60 million to resolve certain fee disputes. The companies settled disputes over hundreds of millions of dollars in fees related to connecting calls, billing and collection agreements and other items in dispute before WorldCom filed for bankruptcy protection in July 2002.

Associated Press was used in compiling this report.