Verizon Takes Billions in Charges for Oath, Voluntary Buyouts

Verizon Communications Inc. said on Dec. 11 it will take a $4.6 billion charge related to its Oath media assets—which includes digital media sites Yahoo and AOL—and a severance charge of up to $2.1 billion for voluntary buyouts in the fourth quarter.

The largest U.S. wireless carrier by subscribers said in a regulatory filing that it saw fewer benefits than it expected from the combination of businesses that make up Oath. Verizon bought Yahoo for $4.48 billion in 2017 and AOL for $4.4 billion in 2015.

In the third quarter, Oath’s revenue fell 7 percent to $1.8 billion, putting it far off from its goal of $10 billion in revenue by 2020, which Verizon said it did not expect Oath to achieve.

Verizon Chief Information Officer EMEA Sanjeev Jain
Verizon Chief Information Officer EMEA Sanjeev Jain at the Digiworld Summit event in Paris on Nov. 28, 2018. (Eric Piermont/ AFP)

Oath has struggled to improve its digital advertising business, competing with the likes of Facebook Inc. and Alphabet Inc’s Google for ad dollars. Verizon said in September that Tim Armstrong, Oath chief executive and architect of the group, would step down and appointed Guru Gowrappan as his replacement.

Armstrong’s departure came after The Wall Street Journal reported people within Oath felt they did not have enough access to Verizon’s wireless subscriber data to improve Oath’s advertising.

Verizon had said that about 10,400 employees will leave the company by the middle of next year as part of its voluntary separation program. The employees will get a salary of up to 60 weeks, bonus and benefits, depending on their length of service.

The New York based-company said the severance charge was mainly due to the buyouts announced on Dec. 10 as well as other headcount reductions.

Verizon, which had 152,300 employees as of the quarter ended Sept. 30, has been looking to cut costs as it ramps up investment in its next-generation 5G network, which is expected to fuel its future growth.

It said severance charges in the fourth quarter would come to $1.3 billion to $1.6 billion after tax, with the Oath charge amounting to $4.5 billion after tax.

Analysts on average expect Verizon to post a profit of $1.08 per share for the current quarter, according to IBES data from Refinitiv.

The company is set to post its fourth-quarter results on Jan. 29.

Shares of Verizon were up 1 percent to $58.89 in afternoon trading.

By Sheila Dang and Sonam Rai