Verizon will cut about 15,000 jobs after new CEO says ‘cost reductions will be a way of life for us here’

Verizon is reportedly planning its largest-ever job reduction, cutting approximately 15,000 positions, as new CEO Daniel Schulman moves to reduce costs amid intensifying competition and significant subscriber losses. This strategic shift follows a disappointing Q3, where Verizon lost 7,000 postpaid mobile lines against analyst expectations for gains, while rivals saw increases. Schulman, known for his turnaround success at PayPal, aims to prioritize cost efficiencies and reverse customer attrition, though analysts anticipate a challenging path to improved performance.

Analysis

Verizon (VZ) is embarking on a significant cost-reduction strategy, reportedly planning to eliminate approximately 15,000 jobs—its largest reduction ever—and transition 200 stores to franchises. This move follows a disappointing third quarter where the company lost 7,000 postpaid mobile lines, contrasting sharply with analyst expectations for a 19,000 gain and marking its third consecutive quarter of subscriber attrition. The overall sentiment is moderately negative, with VZ specifically registering a highly negative per-ticker sentiment, reflecting market apprehension.

This aggressive restructuring is being spearheaded by new CEO Daniel Schulman, who assumed leadership just over a month ago and has stated that "cost reductions will be a way of life." Schulman brings a strong track record, having tripled PayPal's (PYPL) revenue and quintupled its EPS during his tenure, signaling a clear intent to drive operational efficiency and profitability. His mandate is to reverse the current trend of subscriber losses and enhance competitiveness.

The challenging competitive landscape is underscored by rivals AT&T (T) and T-Mobile (TMUS) reporting significant postpaid subscriber increases during the same period. While Schulman's experience suggests potential for strategic transformation, Morgan Stanley analysts caution that improving Verizon's operating and financial performance will be "not easy or quick." The market impact score of 0.6 indicates that this strategic shift is expected to have a notable influence on the company's trajectory.

Key Decisions for Investors

• Monitor the efficacy of new CEO Schulman's aggressive cost-cutting initiatives, including the 15,000 job reductions and store franchising, on Verizon's operational efficiency and profitability.
• Evaluate Verizon's ability to stem subscriber losses and regain competitive ground against AT&T and T-Mobile, as this will be crucial for reversing the negative trend.
• Assess the long-term strategic implications of Schulman's turnaround efforts, acknowledging analyst warnings that performance improvement will be challenging and not immediate.