Recently, Verizon Communications® said that it would take a charge of $4.6 billion linked to Verizon’s Oath media assets, comprising AOL and Yahoo, and up to $2.1 billion in severance charges for voluntary buyouts in the fourth quarter.
In a regulatory filing, the wireless provider said that it saw fewer advantages than what it anticipated from the mix of businesses making up Oath. The carrier acquired AOL in 2015 for 4.4 billion, and Yahoo in 2017 for $4.48 billion.
In the third quarter, the revenue of Verizon’s media business dropped seven percent to $1.8 billion, a wide stretch from its $10 billion revenue goal for 2020. Recently, the carrier said it was not anticipating the media business to achieve its revenue objective.
Oath has struggled to enhance digital advertising business, with severe competition from players namely Facebook and Google that dominate the ad space. The wireless carrier said earlier this year that the CEO of Oath, Tim Armstrong, would resign from the post, and appointed Guru Gowrappan as the successor to him.
The departure of Tim Armstrong came following The Wall Street Journal reported that people in Oath felt a lack of access to the wireless subscriber data of Verizon® to improve its advertising.
The wireless provider had said that around 10,400 employees would leave the company by 2019 mid, as part of its voluntary separation plan. They will receive a salary of up to sixty weeks, benefits and bonus, depending upon service duration.
The carrier said the severance charge was primarily owing to the recently announced buyouts and other headcount reductions.
Verizon®, which had an employee strength of 152,300 as of the previous quarter which ended on September 30, 2018, has been planning to cut costs as it increases investments in the next-gen 5G network, expected to fuel its growth in the future. As of now, it is the biggest wireless carrier in the US, going by number of subscribers.
The company said that severance charges in Q4 would come to be $1.3 billion following tax, with its media business charge amounting to $4.5B after tax.
Analysts on average anticipate the carrier to post a profit of $1.08 a share for the present quarter, as per Refinitiv’s IBES data.
The wireless internet provider is set to post the fourth quarter results of it on January 29, 2019.