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Verizon 4Q income flat
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January 31, 2002: 11:17 a.m. ET
Telecom's results meet analysts' forecasts, reflecting Sept. 11 impact.
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NEW YORK (CNN/Money) - Verizon Communications posted a $2 billion net loss Thursday, including restructuring and other charges, but matched Wall Street expectations for an operating profit, as the biggest local phone carrier was hurt by the Sept. 11 terrorist attacks.
Including $4.1 billion in charges, the company posted a net fourth-quarter loss of $2 billion, or 75 cents a share, compared with a net profit of $1.9 billion, or 70 cents a share, a year earlier.
The charges are mainly related to severance costs associated with slashing 10,000 jobs in the period, the declining value of certain investments and exposure to Argentina's economic crisis.
Verizon, along with other telecommunications carriers, has been struggling with declining demand, particularly among business customers, as companies cut back on spending in the sluggish economy.
The company reaffirmed its fourth-quarter expectations on Jan. 9, saying then it expected a charge in the period as it eliminated jobs in December through a voluntary buyout program.
Excluding those charges, Verizon posted earnings of $2.1 billion, or 77 cents a share, unchanged in dollars and earnings per share from a year earlier. Analysts on average anticipated Verizon would post a profit of 77 cents a share, according to the research firm First Call.
Fourth-quarter revenue rose 1 percent to $17 billion from $16.9 billion.
Verizon's (VZ: down $0.18 to $45.90, Research, Estimates) stock rose a quarter to $46.33 in early trading following the earnings announcement Thursday.
"In Verizon's first full year of operation, we have repeatedly demonstrated the strength of the GTE and Bell Atlantic merger," Co-CEO Charles Lee said in a statement. "We achieved solid results for the quarter and for the year despite the continuing downturn in the economy."
Verizon also said it anticipates 2002 earnings of $3.20 to $3.30 a share with revenue growth of 3 percent to 5 percent. Analysts currently expect the company to post a profit of $3.25 a share for 2002, according to First Call.
Capital expenditures are expected to be $15 billion to $16 billion.
For the full year, Verizon reported net income of $400 million, or 14 cents a share, down sharply from $11.8 billion, or $4.31 a share, in 2000.
Full-year revenue increased 3.8 percent to $67.2 billion from $64.7 billion.
The company slashed 16,000 jobs in 2001, bringing its total headcount down to 247,000. Cost-cutting in the Domestic Telecom unit, including overtime reductions and hiring contractors, eliminated the equivalent of an additional 13,000 jobs.
Verizon reported a 59 percent increase in long-distance customers in the full year, with about 40 percent of those coming from New York, Massachusetts and Pennsylvania.
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The Domestic Telecom unit trimmed cash expenses by 4.6 percent to $6 billion in the quarter compared with a year earlier. Total operating expenses were down 2.3 percent.
Domestic Telecom decreased its adjusted cash expenses over the prior-year period. In the fourth quarter, the unit's adjusted cash expenses were down 4.6 percent to $6.0 billion from $6.3 billion in the fourth quarter 2000, and the unit's total operating expenses were down 2.3 percent to $8.4 billion from $8.6 billion. 
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