Time for Budget Cuts
Verizon Communications Inc. (NYSE:VZ) is making some bold moves to trim its cost base, one of which inflamed the wrath of New York Governor Andrew Cuomo.
The company is closing call centers in five states, including New York. It is part of an ongoing consolidation that would cost roughly 3,200 workers in total. Rochester and New York City would be two of the affected jurisdictions, leaving no doubt as to why Governor Cuomo is upset. (Source: “Verizon Closing Call Centers 5 States, Including New York,” CNBC, October 13, 2016.)
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But the damage would extend to other parts of the country as well. Bangor, Maine; Lincoln, Nebraska; Wallingford and Meriden, Connecticut; and Rancho Cordoba, California are all parts of the country that would suffer job losses from the expected closures.
The bulk of the cuts are expected in coastal states.
New York is losing 850 positions, including 600 near Rochester. On top of those cuts, there are about 700 positions being slashed in California, with 300 more scheduled for relocation.
Verizon has commented on the cuts, saying all employees were given the option of relocating to different sites, but that has yet to be confirmed. Meanwhile, a spokesperson for Governor Cuomo called the job cuts “an egregious example of corporate abuse.”
Analysts have expected something like this ever since the company pushed past its core functions of providing cable and wireless services. The acquisitions of AOL Inc. (NYSE:AOL) and Yahoo! Inc. (NASDAQ:YHOO) revealed Verizon’s media ambitions, but they were also capital intensive moves.
The AOL buyout ran up a $4.4-billion tab for Verizon, a hefty price considering AOL’s merger with Time Warner Inc. (NYSE:TWX) 15 years prior had been one of the worst disasters in U.S. corporate history.
Credits: Flickr.com/Mike Mozart
But then Verizon followed up that acquisition with its $4.8-billion bid for Yahoo!’s core assets. Combined, the two media companies make Verizon a major force in online advertising—only Alphabet Inc. (NASDAQ:GOOG) and Facebook Inc. (NASDAQ:FB) are ahead of them.
That being said, the company had indicated it would start to trim its cost base. The call centers are simply holding them to those earlier commitments.
