Verizon tells workers and investors two different stories about business prospects

Bargaining resumed this week between Verizon and the two union that represent Verizon workers on the East Coast from Virginia to New England, CWA and IBEW. CWA reports that Verizon continues to demand health care and other major concessions because the company “tell us that they are in a death spiral as a company, and we need to accept their package of demands if we are going to save the company.”

While Verizon was painting a gloomy picture of its prospects to its unions, its message to investors was quite upbeat. Its quarterly earnings report issued Friday, July 22 shows that earnings for both its wireless and wireline operations were higher than expected during the second quarter of 2011. “We expect to build on this strong, positive momentum to continue to drive profitable, sustainable growth,” said Verizon CEO Ivan Seidenberg.

Since negotiations began, Verizon has justified its demands that union workers take major cuts to their health care, allow the company to outsource more work, give up wage progressions, and scrap contract language that protects workers’ rights on the job because Verizon’s wireline business, where Verizon’s union workers work, is withering away as more customers scrap their land lines in favor of wireless devices.

The unions have countered that the wireline business is changing, not fading away. Verizon and other telecommunication company’s are providing new and more services such as internet and television service over their land lines and business and government still rely on land lines for telephone service and for internet and IT network functions.

If wireline business is withering away, you can’t tell it from the second quarter earnings report. Here are some highlights from Verizon’s media statements on its second quarter earnings:

  • Wireline operating revenues for the second quarter of 2011 was $10.2 billion, down slightly by 0.3 percent from the same period in 2010.
  • Wireline earnings before taxes, interest, depreciation, and amortization (EBTIDA) margin was 23.8 percent up from 22.4 percent from the same period in 2010 and the fifth consecutive quarter in which the EBTIDA margin grew.

The EBTIDA margin is a measure that investors use to evaluate a company’s core profitability. An EBTIDA margin of 7.5 percent to 15 percent for a large corporation is considered acceptable. The EBTIDA margin is determined by dividing the earnings before taxes, interest, depreciation, and amortization (in other words, earnings after operating costs are subtracted) by total revenue.

  • FiOS internet connections increased by 189,000 and FiOS television connections by 184,000.
  • 34 percent of potential internet customers subscribe to Verizon, up from 30 percent during the same period in 2010.
  • 30 percent of potential television customers subscribe to Verizon, up from 26 percent during the same period in 2010.

While Verizon continued to stand pat in demanding significant concessions from union members, CWA and IBEW continued to mobilize members to demonstrate to the company that its members are resolved to maintain pay and benefits that make their jobs good union jobs.

Locals continue to hold informational picket lines before work and at lunch time. CWA Local 1300o in Philadelphia held mass tailgates at every Verizon location in the city and workers at some Verizon sites are wearing black to work on Monday and red to work on Thursday to demonstrate unity.

 IBEW Local 2222 in Boston on its website told members, “There is a very real possibility that we will be on strike against Verizon in August, 2011.  Take a few minutes now to set up a strike fund by opening a Rainy Day Account through the Liberty Bay Credit Union.”

The big push by both CWA and IBEW is to have a massive turn out at their solidarity rally on July 30 at the Verizon headquarters in New York City. Locals from all over the East Coast are chartering buses to take members to New York.

“We need every member to make a commitment to be in (New York City) on July 30th, “read a bargaining report from CWA District 13. “To show Verizon management that we are dead serious about our demands for jobs.”


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