Verizon Communications (VZ) is planning to lay off about 15,000 workers in order to cut costs, according to The Wall Street Journal. Notably, this would be the biggest round of layoffs in the wireless carrier’s history. Most of the job losses will come through direct layoffs, and Verizon plans to convert around 200 of its stores into franchises. That move would shift those store employees off Verizon’s payroll. As of February, the company had around 100,000 employees.
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These job cuts come as Verizon struggles to hold on to its customers. The company has lost valuable postpaid phone subscribers for three straight quarters, while competitors like AT&T (T) and T-Mobile (TMUS) have been adding new customers. To try to stay competitive, Verizon introduced a price-lock offer in April, but rivals quickly matched it. As a result, Verizon lost 7,000 net postpaid customers in the most recent quarter, even though analysts had predicted a gain of 19,000.
To address these problems, Verizon recently named Daniel Schulman as its new CEO. Schulman, who previously led PayPal (PYPL) and Virgin Mobile USA, has promised to lower costs, shut down unprofitable parts of the business, and make the company more efficient. Interestingly, analysts at Morgan Stanley noted that while Schulman’s plan won’t be easy, it could improve Verizon’s performance over time.
Is VZ Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on VZ stock based on five Buys, 11 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average VZ price target of $46.79 per share implies 12.8% upside potential.
