We’ve looked at the Verizon (stock symbol VZ) situation for a few weeks now and read statements by both the company and its union. An examination of Verizon’s latest 10-Q SEC filing does not support the company’s position, that financial stress forces VZ to fire its call center employees and outsource the work to India. To demonstrate my conclusion, at the end of this report, I reprint, from Yahoo’s finance pages, the 10-Q filed last month, a report which says it all.
If you study this report you will see that Verizon income is not suffering, nor does it appear to face any downturn. Operating income is holding steady, expenses as well; the firm’s EBITDA (earnings before income tax, depreciation and amortization) run about 22 percent of revenues, good enough to support a dividend distributed from an AFTER TAX 15 percent profit.
If VZ’s after tax profit came in at about five percent, or less, there would be an argument for slashing employee costs; although even then, I think it a foolish economy to fire long-established, home front employees in favor of poorly paid, overseas workers hard to monitor and/or discipline. With profit at 15 percent, no such argument makes any sense at all. VZ must keep its domestic call center people and accord them all the wage and benefits that top quality workers merit. In addition, VZ should allow its wireless employees to unionize if they wish to form one. VZ should welcome that its wireless employees want to stay on the job rather than create the expense and distractions of worker turnover.
I cannot imagine that VZ’s top managers do not understand all of the above. What, then, can possibly be driving them to disrupt the firm’s operations, as they have ? It seems that the initiating force is investor desire to “maximize” value, i.e., to wrench VZ stock from the high $ 40s to, maybe a temporary $ 60 per share based on cutting employee costs.
If stock speculation by vast pools of wanderlust money is the force at work upon VZ, it should be cut down. Speculation of publicly traded stock is the single most damaging feature of our macro economy today. Speculative manipulation, and rapid-fire trading upon temporary inefficiencies, aids no one but the speculators. The money pushed into quickie manipulations doesn’t invest in a product, doesn’t aid a service, doesn’t assist employees, doesn’t innovate the economy. It is an entirely inbred self serving of money for moneys’ sake. It is NOT capitalism. I am not sure what kind of ism it IS.
It may be many years before the ills of speculation are curbed (and they can be curbed, by tax rules, by SEC regulations, by Federal Reserve margin requirements, and by corporate governance law reform), the only weapon that the capitalist economy has is a workers’ strike. Make no mistake ; a company’s workers are an asset. A MAJOR asset. Their skill, their reliability, and yes, their good earnings are vital to the probity and market power of an enterprise. Verizon workers striking are doing the work of capitalism, and we who support the indomitable power of capitalist operations should thank the striking Verizon workers.
— Mike Freedberg / Here and Sphere
Verizon’s first 2016 quarter 10-Q SEC report :
VERIZON COMMUNICATIONS INC – 10-Q – 20160428 – INCOME_STATEMENT
|Service revenues and other||$||28,217||$||28,611|
|Wireless equipment revenues||3,954||3,373|
|Total Operating Revenues||32,171||31,984|
|Cost of services (exclusive of items shown below)||7,614||6,988|
|Wireless cost of equipment||4,998||5,108|
|Selling, general and administrative expense||7,600||7,939|
|Depreciation and amortization expense||4,017||3,989|
|Total Operating Expenses||24,229||24,024|
|Equity in losses of unconsolidated businesses||(20||)||(34||)|
|Other income, net||32||75|
|Income Before Provision For Income Taxes||6,766||6,669|
|Provision for income taxes||(2,336||)||(2,331||)|