Verizon aims high with Yahoo after strike dings earnings
Verizon on Tuesday reported earnings hit by a prolonged workers’ strike. But executives kept the focus on the future — namely a deal to buy Yahoo they hope will make it a much larger media distributor.
With both events in his rearview mirror, Verizon CEO Lowell McAdam offered a vision of the telecommunications giant’s future as a media distributor.
“We are extremely excited about the assets that Yahoo has in the area of sports, finance, email and news, and you match those up with AOL (which Verizon acquired last year), and we’ve just made an exponential leap in capabilities here,” McAdam said during a conference call Tuesday.
Verizon plans to pay $4.8 billion for Yahoo’s core Internet business, which includes properties such as Yahoo Sports, Yahoo Finance, Yahoo Mail and Tumblr, in a transaction expected to close by the end of the year or in the first quarter of 2017.
The nation’s largest wireless carrier acquired AOL in May 2015 for $4.4 billion. AOL programming such as content from The Huffington Post is among those delivered on Verizon’s free, ad-supported go90 mobile service launched in October 2015.
With Yahoo on board, Verizon hopes to challenge Google and Facebook’s dominance in digital advertising and a growing digital video marketplace, which has an estimated addressable market of $180 billion by 2020, McAdam said.
During the second quarter of 2016, a seven-week work stoppage in Verizon’s wireline business — from mid-April through much of May — hurt earnings by about 7 cents per share, the company said. Adjusted earnings per share of 94 cents per share for its fiscal second quarter beat the 93 cents per share predicted by analysts polled by S&P Global Capital Intelligence.
Verizon’s net income fell to $702 million from $4.2 billion in the April-June period the year before. Revenue of $30.5 billion missed Wall Street expectations of $30.96 billion.
Non-operational expenses included a non-cash, after-tax loss of $2.2 billion made up in part by a re-measurement of pension and retirement benefits triggered by the strike, the company said.
Shares were down 1.9% Tuesday to $54.81.