Verizon missed revenue estimates for the first quarter, and although management maintained their previous guidance, they warned that the ongoing strike could weigh on the mobile carrier’s second quarter results. Investors sent Verizon stock lower during regular trading hours today as they worried about the revenue miss and management’s warning. Shares declined by as much as 3.75% to $49.81 in afternoon trading.
Verizon guides for flat earnings
Verizon posted in-line adjusted earnings of $1.06 per share and revenue of $32.2 billion (consensus at $32.4 billion). The mobile carrier said it sacrificed revenue during the first quarter to win over new customers through deep discounts. Management said they expect adjusted earnings for the second quarter to be about the same as last year but added that they believe the East Coast strike could weigh on the results, potentially setting up investors to expect an earnings miss in the next report.
Verizon said because of where the labor contract negotiations currently stand, they will create pressure on the second quarter results.
Thousands of Verizon workers on strike
Almost 40,000 Verizon employees are currently on strike, with most of them working in the wireline segment. They went on strike when talks between their labor union and company management stalled after negotiations dragged on for months. They’ve been working without a contract for eight months.
While the majority of the workers who are on strike work in the wireline business, Fortune reports that they’re attempting to drag the fast-growing wireless business into the fray. Workers all along the East Coast from Massachusetts to Virginia have been striking since April 13, not only refusing to work but also picketing the company’s retail wireless stores.
Then last week, the battle escalated even more as the striking Verizon workers started handing out flyers to customers entering the retail store asking them to boycott the wireless business. The flyer lists some of the main complaints, including that the CEO earns more than 200 times the average Verizon worker. According to Fortune, a spokesperson for the mobile carrier called the union’s claims “pure hogwash.” The person also said they’ve been trying to reach a fair contract for quite some time, despite the union’s claims otherwise.
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