Strike to pressure Verizon earnings; Q1 net income meets estimates

Thu Apr 21, 2016 12:21pm EDT
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By Malathi Nayak and Sai Sachin R

(Reuters) - Verizon Communications Inc said an ongoing strike by its wireline workers was expected to hurt earnings in the current quarter, even as it reported first-quarter net income that met analyst expectations amid strong tablet sales.

Shares of Verizon, the No. 1 U.S. wireless carrier, fell 3.4 percent to $49.99 at midday on Thursday.

If the strike, now in its second week, continues for an extended period of time, it could pressure full-year earnings, Chief Financial Officer Fran Shammo said in an interview.

"We'd like to settle this sooner than later," Shammo said.

About 40,000 employees of Verizon's wireline business, which includes its Fios Internet, telephone and TV services, went on strike after reaching an impasse in talks over a new labor contract. Issues include healthcare, offshoring of call center jobs, temporary job relocations and pensions.

In the wireline business, consumer revenue of $4 billion was little changed from a year ago.

Net income attributable to the company rose to $4.31 billion, or $1.06 per share, in the first quarter, meeting analysts' expectations.

The company stood by its full-year profit forecast.   Continued...

The entrance to a Verizon wireless store is seen in New York, in this May 12, 2015, file photo.  REUTERS/Shannon Stapleton/Files