Verizon CEO: Strike May Hit Results

Verizon Communications Inc. hinted on Tuesday that the continuing labor strike may impact its second-quarter results.

The strike, which began April 13, involves nearly 40,000 employees, primarily in its landline division. The carrier has been able to keep up with maintenance requests, but it is falling behind on new Internet and TV installations, Verizon Chief Executive Lowell McAdam told investors at a conference in Boston Tuesday. Union members were picketing outside the event.

"Our managers are doing a super job out there," he said of the nonunion employees filling in for the striking workers. "We're doing a lot of installations but we're not doing the same volume as we were before."

Mr. McAdam's remarks echoed that of his finance chief, Fran Shammo, who said at a conference last week: "I would be optimistic if I said we would be net positive" on landline Internet and TV additions in the second quarter.

Mr. Shammo said customers looking to switch to its Fios service are willing to wait for the strike to end, but the company loses out on people who move and need service immediately.

It isn't clear how the strike may be affecting additions in the wireless division, which accounts for about two-thirds of revenue. Only about 160 of the striking workers are wireless employees. But picket lines outside wireless stores may impact foot traffic, analysts say.

Last week, Wells Fargo analyst Jennifer Fritzsche cut her estimates for Verizon's second-quarter wireline division revenue by $343 million and dropped her full-year earnings-per-share projection to $3.91 from $3.98.

Mr. McAdam said the carrier would be more specific about the business impacts of the strike after it ends.

The company is negotiating with union leaders with help from officials at the Department of Labor, including Labor Secretary Thomas Perez and federal mediator Allison Beck.

A key part of the negotiations is work rules. Verizon wants more flexibility to relocate workers and redirect call center traffic, while the unions are pushing for job security provisions.

A spokeswoman for the unions said talks were ongoing but declined to comment further, citing a restriction by the Labor Department.

Write to Ryan Knutson at [e-mail]

(END) Dow Jones Newswires

May 24, 2016 11:15 ET (15:15 GMT)

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