Layoffs Loom At Verizon's Oath In The Wake Of $4.5 Billion Writedown

Verizon's $9 billion bet on the digital media business may rank among the worst blunders in the history of corporate America. Unfortunately, extracting itself from the bad deals won’t be easy.

Selling its Oath digital properties, including HuffPost, AOL and Yahoo, isn’t realistic in the wake of Verizon’s decision to take a $4.5 billion writedown on the business, effectively rendering it worthless. Spinning Oath off would also be difficult because few investors would be interested in buying shares in a company that accounts for roughly 3% of all online advertising sales.

Verizon has little choice but to make the best of a bad situation. According to the Wall Street Journal, Verizon executives “are exploring ways to supplement weaker-than-expected advertising revenue and potentially wind down some AOL or Yahoo brands.” Additional layoffs beyond the 10,400 workers who have voluntarily agreed to leave are in the works.

When Verizon acquired AOL for $4.5 billion in 2015, it had about 4,500 employees. Yahoo had about 4,600 full-time workers at the time of its $4.83 billion sale in 2017. According to Verizon, there were more than 11,000 Oath workers as of the end of the third quarter. The wireless giant's total workforce is about 155,400.

"We are committed to Oath's success, and yesterday's 8K disclosures speak for themselves," writes Bob Varettoni, a spokesman for Verizon, in an email.

Telecom experts, including independent analyst Jeff Kagan, were skeptical about Verizon’s move into digital media from the start. In an interview, Kagan noted, “I felt like at the time that it made absolutely no sense to me, and it still makes no sense.”

For the first nine months of 2018, Oath’s operating revenue was $5.6 billion, roughly 6% of Verizon's overall revenue of $96.6 billion during that same time period. Verizon doesn’t report Oath’s profitability separately, although it has indicated that the business is operating in the red. It doesn’t expect Oath to reach the company’s annual revenue target of $10 billion by 2020.

https://www.forbes.com/sites/jonathanberr/2018/12/12/layoffs-loom-at-verizons-oath-in-the-wake-of-4-5-billion-charge/

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16 replies (most recent on top)

@1zmt, golden faucets? golden toilets?

Why not!

@1zmt, if I might be so bold as to take it one step further, perhaps even golden showers are in everybodys future? Dream big!

Give it time to play out.

When Lowell, et all, were in Irving last year for the annual meeting, I asked him a direct question: How he felt about reports that VZ did not have enough cash to support Capital Investment, Dividend payout, and debt load? He responded by stating that he was confident cash was no problem. He stated that he would soon be picking off gold nuggets from the revenue tree he planted in Marni's backyard. We would be so flush with cash that we all would be drinking out of golden faucets and flushing golden toilets. "No problem", he said. Reports are all false. We know better... Don't worry...trust me.

Well, Marni took her golden revenue tree out the back door, Verizon has cut the capital spending projections this year, so expect the dividend payment to be cut next. When that happens, shareholders will begin to believe that Verizon is in bad cash shape, stock prices will fall, heads will roll, and rumors of acquisition with ATT will emerge. Mark my words kids.... this will happen....

Mdf... the intellectual properties that you think were so valuable are now worthless. The customer data that vz thought they were buying/getting their hands on is now taboo due to the change in climate with regards to privacy issues. The "assets" that were purchased are now worthless.

Go back and read the first two paragraphs....wireless blunder! Ranks among the biggest in corporate America.

You union trolls wireless has been keeping the whole ship a float for a long time now!!

Don’t worry....wireline will bail out wireless AGAIN!!

This is what happens when uneducated id--ts try to comment on stuff. The company wrote down the value of oath. The brand is worthless.

Let me make this easy for you to understand.

Brands have an intangible value. Meaning people know the Yahoo and AOL brands. Ask a friend or family if they know what Yahoo or AOL is. Now ask them if they know what Oath is. Do you understand now? Oath contains no goodwill because the brand is new. Brand recognition carrries significant value. Fun history lesson, Cingular actually bought ATT and kept the ATT name because the brand and logo was more valuable.

This is an very smart move that will ease the street’s pressure on the performance of the old brands expectations.

The acquition was more geared towards properties (not the real estate kind). Both companies had very unique and valuable intellectual properties. This play a big roll in our future when you start talking about AI, big data analytics, AR/VR, etc.

While they both have tangible assets totaling about 10 billion in value, Verizon will sell out what it no longer wants or needs.

Will Marnie ever get a job in this industry again?

And in the 2008 Financial crisis, Lehman Brothers and Washington Mutual said "hold my beer, I got this" , with $691B and $328B bankruptcies...

I don't think a $9B write-down would even make the top 100.

Was buying them a bad idea?

IMHO, YES

But as far as the "may rank among the worst blunders in the history of corporate America. "?

NOT EVEN CLOSE

anyone from fMCI would recall Ebbers, Sullivan, and the Worldcom scandal...

That was ~$104B loss in valuation.

With the Oath write down, expect more RIFs it's all they know how to do. Most of those employees will be gone with a bunch of others by 2020. Verizon wanted to play in the majors with Grammer school plays. When you buy out dated products do you really expect them at the same level as newer, fresher, more useful and above all useful products..

When your late to the table you get the crums.

How many times have they said "change is good"....or the word "transforming"....And the sheeple clapped...We need to give the customers what they want....I still cringe at all the webcast...I'll also never forget Stratton saying we shouldn't worry about T-Mobile...Their model is unsustainable...disgusting what has and is happening...

9B dollar loss..Great job Lowell you engineered the greatest blunder in modern Corp history.Enjoy your mountain asshat .Even I knew this was a major f up

You're sure we're not still trying to be a media company? Somebody better tell those folks

cosplaying media company and running out of space at 'The 140'

This may just show what happens when a company doesn't "stick with its knitting" or core business. Hindsight is 20/20 but did Verizon really want to become a media company.

That is really encouraging to read this purchase was "may rank among the worst blunders in the history of corporate America. "

I take it that Oath workers weren't offered the package?

Welcome to the new Oath people joining the forum!

Thread regarding Verizon Communications Inc. layoffs

Layoffs Loom At Verizon's Oath In The Wake Of $4.5 Billion Writedown

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