Verizon Communications (VZ) revealed that it will incur a pre-tax severance charge of $1.7 billion to $1.9 billion in the third quarter. This significant charge stems from a voluntary separation program for 4,800 U.S.-based management employees, announced in June as part of a cost-cutting move.
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It is worth mentioning that over half of the affected employees are expected to leave the company this month, with the remainder departing by March 2025.
Verizon also plans to end the use of certain real-estate assets and exit non-strategic business areas. These restructuring efforts are expected to result in an additional charge of $230 million to $380 million in Q3.
Investors should note that VZ is expected to release its Q3 results on October 22.
VZ Aims to Boost Finances and Competitive Position
Verizon’s cost-cutting measures aim to improve its financial performance and strengthen its competitive position in the telecommunications market. While these initiatives may lead to short-term expenses, they are expected to contribute to long-term cost savings and improved profitability.
Additionally, Verizon recently agreed to acquire Frontier Communications (FYBR) for $20 billion. This acquisition supports Verizon’s broader strategy to expand its fiber-internet presence across the U.S., further strengthening its competitive position.
Overall, Verizon’s restructuring efforts, including employee reductions, business streamlining, and the Frontier acquisition, reflect its commitment to reducing costs, improving efficiency, and positioning itself for future growth.
Is Verizon a Buy, Sell, or Hold?
Turning to Wall Street, VZ has a Moderate Buy consensus rating based on seven Buys and seven Holds assigned in the last three months. At $45.68, the average Verizon price target implies 4.15% upside potential. Shares of the company have gained about 22.2% year-to-date.
