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TechMobile Executive

Now-Ended Verizon Strike Won’t Hurt Profits Much, CFO Says

By
Aaron Pressman
Aaron Pressman
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By
Aaron Pressman
Aaron Pressman
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June 7, 2016, 3:37 PM ET
Photograph by Mark Wilson Getty Images
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With the strike by Verizon Communications workers ended, the company said the financial impact of the seven-week walk out would be muted.

Verizon’s second quarter profit per share will be five cents to seven cents lower than expected, Chief Financial Officer Fran Shammo said on Tuesday at the Bank of America Merrill Lynch Global Telecom & Media Conference. Before Shammo spoke, analysts had been expecting earnings per share of 98 cents on average for the quarter and a total of $3.95 for the year, according to Reuters.

The impact was from the higher expenses of employing replacement workers as well as a drop in new installations of FiOS Internet and cable TV service, Shammo said. The nearly 40,000 strikers mainly worked from Massachusetts to Virginia, installing and servicing Verizon’s landline telephone and FiOS offerings. They walked off the job April 13 and returned on June 1 after approval of a tentative deal that still must be ratified by the workers.

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Verizon’s larger and faster growing wireless side was not hurt by the strike, Shammo said. Workers picketed in front of wireless stores around the country and called for a boycott during the strike. “You really won’t see any impact on the wireless side of the house,” Shammo said. “So it’ll be a normal quarter for wireless.”

Shares of Verizon (VZ), which dropped about 3% during the strike, gained 2% to $51.89 in afternoon trading on Tuesday. The shares now stand just six cents below the price they closed at on the day before the strike started.

The company added thousands of non-union replacement workers during the strike in an effort to keep up with demand.

But the fill-ins, many of whom came from the ranks of office workers and management, weren’t as adept at shimmying up telephone poles and wiring new set-top boxes. After initially saying they expected no financial impact from the strike, Verizon executives last month admitted that in fact new installations would be lower than expected.

The two sides settled after almost two weeks of talks under the auspices of a federal mediator after Verizon agreed to cut back some of its proposals on outsourcing and using non-union contractors that had drawn the most heated protests from the strikers.

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By Aaron Pressman
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