Not in Fairfield County?
August 22, 2019Cart

Business

by Fairfield County Business Journal
by FCBJ

Verizon worker buyouts, impairment charge to cost more than $6 billion

A day after announcing that 10,400 management employees have accepted its buyout offer, Verizon said in an SEC filing this morning that it expects to record a noncash goodwill impairment charge of approximately $4.6 billion in the fourth quarter.

The charge is a result of its overvaluation of its Oath unit, which until June 2017 was known as AOL Inc.

Vestberg

Oath, which came about with the merger of the Yahoo Inc. and AOL  businesses, “has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings,” the filing states. “These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business.”

Compounding its financial matters, Oath on Dec. 4, agreed to pay $4.95 million for violating the Children’s Online Privacy Protection Act. New York State Attorney General Barbara D. Underwood said “COPPA is meant to protect young children from being tracked and targeted by advertisers online. AOL flagrantly violated the law – and children’s privacy – and will now pay the largest-ever penalty under COPPA.”

This morning’s filing also shows that the buyouts along with other worker reduction initiatives, will result in Verizon having a severance charge in the range of $1.8 billion to $2.1 billion in the fourth quarter of 2018.

Verizon CEO Hans Vestberg offered an upbeat message to employees following the buyout announcement, saying, “For those who were accepted, the coming weeks and months will be a transition. For the entire V Team, there will be opportunities to work differently as we prepare for the great things to come at Verizon. Together, we are leading the world during this great technological revolution, and we will continue to lead the way.”

The buyout offered up to 60 weeks of salary, bonus and benefits, depending on length of service. The workers’ last day with the company will either be the end of the month or the end of March 2019 or June 2019, depending on the needs of the business. The company had 152,300 employees at the end of the third-quarter.

In the SEC filing, Verizon stated that it expects to complete “an internal reorganization of legal entities associated with its wireless business” this month. After reorganizing, it said it expects to have a nonrecurring deferred tax benefit of approximately $2.1 billion, which will reduce its deferred tax liability by the same amount.