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Massive charges hurt Verizon's earnings

Verizon Communications Inc., the largest U.S. telephone company, on Thursday posted a fourth-quarter loss due to massive charges to cover the cost of cutting 10 percent of its work force.
/ Source: Reuters

Verizon Communications Inc., the largest U.S. telephone company, on Thursday posted a fourth-quarter loss due to massive charges to cover the cost of cutting 10 percent of its work force.

Excluding charges, the results beat Wall Street estimates

New York-based Verizon's loss totaled $1.46 billion, or 53 cents a share, compared with a profit of $2.29 billion, or 83 cents a share, a year ago.

The loss included $3.1 billion in one-time items, primarily associated with job cuts of more than 21,000 workers. Excluding those special items, Verizon earned $1.6 billion in the quarter, or 58 cents per share.

Verizon's operating revenues were $17.28 billion, up 0.7 percent from the prior year's quarter, driven by growth in its wireless telephone affiliate Verizon Wireless. Its core domestic telecom revenues dropped 1.6 percent to $9.91 billion.

Wall Street analysts expected Verizon to earn 56 cents on revenues of $17.31 billion, according to tracking firm Reuters Research, a unit of Reuters Group Plc.

Verizon and other Baby Bells have seen their local telephone sales erode as competition has escalated and more customers have shifted to wireless telephones and electronic mail. Verizon lost 4.2 percent of its local-telephone access lines in the quarter.

To offset the decline in its local phone business, which generates the bulk of Verizon's profits, the company has pushed into newer markets such as wireless, long-distance and high-speed Internet access.

Wireless service revenue grew 13.9 percent, to $5.4 billion, from $4.7 billion in the fourth quarter 2002. Verizon Wireless, the largest U.S. wireless company, added nearly 1.5 million net subscribers in the fourth quarter, ending the year with 37.5 million customers.

It added 736,000 long-distance lines in the fourth quarter. It ended the year with more than 16.6 million long-distance customers, up 33.3 percent from the end of 2002.

About 41 percent of Verizon's local telephone customers also buy the company's long-distance service. Verizon has been offering discounted packages of services, or bundles, to attract and retain customers and compete against long-distance companies such as AT&T Corp.

Verizon also added 203,000 high-speed digital subscriber line (DSL) Internet customers, ending the year with more than 2.3 million DSL lines.

Verizon has been working to slash costs by cutting its work force, reducing its debt load and interest expenses. Its total debt dropped 14.8 percent to $45.4 billion at the end of the year.