The cost of the severance-which offers up to 60 weeks’ salary and benefits for some employees-will come to $1.3 billion to $1.6 billion after tax in the fourth quarter. Verizon had 152,300 employees at the end of last quarter. In today’s filing, the company disclosed that 10,400 employees had agreed to voluntary buyouts and will leave by June 2019 with severance. Meanwhile, Verizon offered an update on its long-running plan to cut $10 billion in costs by 2021, which includes a head count reduction. “While we believed in the ‘white board’ concept of Oath (offering a new digital advertiser of choice beyond Google and Facebook), we think this has been an uphill fight for Verizon without a significant amount of scale and content ownership.”įritzsche has an Outperform rating on Verizon’s stock. “The hype of Oath has been over for some time,” Wells Fargo analyst Jennifer Fritzsche wrote in a note on Tuesday. Verizon’s stock is up 1.1% in midday trading Tuesday, to $58.89. After tax, that will show up as a $4.5 billion hit to the company’s fourth-quarter net income.Īnalysts, though, have a way of ignoring these charges as a one-time event and had largely already given up on the Oath business. Recognizing that Oath won’t be able to justify its deal premium, Verizon will write off $4.6 billion of the $4.8 billion of Oath’s remaining goodwill balance. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business,” Verizon said in the filing. “Oath has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. But that never panned out and after taking a closer look at the business’ future prospects, Verizon management couldn’t make the math work. (FB) and reach $10 billion in sales by 2020. The original concept had been to acquire enough content and scale to become a viable third choice for digital advertising behind The division had $1.8 billion in sales in the third quarter, down 6.9% from the same period last year. The buyouts are part of a plan to cut costs and shift investments into wireless and 5G.The child of two consecutive acquisitions- AOL for $4.4 billion in 2015 and Yahoo’s operating business for $4.8 billion in 2016-Oath is composed of several internet brands including Yahoo Sports, Yahoo Finance, HuffPost, and Tumblr. Verizon announced Monday that 10,400 management employees had accepted voluntary buyout deals, out of 44,000 who were eligible. Guru Gowrappan, Oath's president and former chief operating officer. He was a driving force behind Verizon's media acquisitions. In September, Oath CEO Tim Armstrong left. This summer, Verizon replaced CEO Lowell McAdam with Hans Vestberg, the telecom company's former chief technology officer. Verizon plans to focus more on wireless technology and less on content and distribution. The Verizon media unit's poor performance led the company to make "unfavorable adjustments to Oath's financial projections" for the next five years. Facebook, Google and Amazon are sucking up ad dollars, forcing publishers to search for other streams for revenue. Oath "has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings," according to a filing with the SEC Tuesday. The telecommunications giant said the integration of Yahoo and AOL didn't meet expectations. With virtually no goodwill brand value, Oath's overall value (assets and goodwill) is now worth half of what it was a few years ago. It bought Yahoo for $4.5 billion in 2017 and AOL, which owns HuffPost, for $4.4 billion in 2015. Verizon snapped up a number of legacy media brands in recent years to create Oath. Verizon said Oath's brand was worth $4.8 billion when it last accounted for the company's goodwill valuation. That's a stunning decrease in value since it formed in 2017. Oath's brand value is now worth just $200 million, according to Verizon. Verizon announced Tuesday that it would take a $4.6 billion writedown on its the media unit, which includes Yahoo and AOL. Verizon just admitted that the value of its media brand, Oath, is essentially worthless.
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