May 24, 2016 / 6:22 PM / 3 years ago

Verizon CEO says strike may impact second-quarter results

(Reuters) - Verizon Communications Inc (VZ.N) Chief Executive Officer Lowell McAdam said on Tuesday the ongoing strike by the No.1 U.S. wireless provider’s nearly 40,000 union employees could pressure second-quarter results.

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

Network technicians and customer service representatives in the company’s Fios Internet, telephone and television services units walked off the job on April 13 in one of the largest U.S. strikes in recent years. The action was called by the Communications Workers of America and the International Brotherhood of Electrical Workers.

The wireless and broadband provider has “pushed off” new Fios service installations as a result of the strike, McAdam said at the J.P Morgan Technology, Media and Telecom conference in Boston.

“We’re doing a lot of installations but we’re not doing the same volume that we had before,” Lowell said. “So we won’t be driving similar numbers in second quarter that we would in first from an installation perspective.”

Union members protested outside the conference venue on Tuesday. The company has brought in managers and thousands of temporary workers aiming to avoid service disruptions.

Verizon’s Chief Financial Officer Fran Shammo, speaking at another conference last week, said the company has been focusing on repair and maintenance issues and that new installations and orders had “significantly dropped.”

“I would be optimistic if I said we would be net positive for broadband and TV this quarter,” Shammo said.

Verizon is expected to report second-quarter results on July 26. In April, it reported first-quarter earnings and said the strike was expected to hurt second-quarter earnings.

The company’s legacy wireline business, which includes Fios, generated about 29 percent of company revenue in 2015, down about 60 percent since 2000, and less than 7 percent of operating income.

If the strike continues for an extended period of time, it could pressure full-year earnings, Shammo told Reuters in April.

Verizon Communications and representatives from the two striking unions are in contract discussions with the help of the U.S. Department of Labor.

Sticking points in the talks include job relocations, offshoring call-center jobs, pensions and healthcare coverage.

The groups will not make any public statements during these talks, the Labor department said last week.

“When it’s done we will make sure to communicate with our investors about what the overall net-net impacts are,” McAdam said at the J.P Morgan conference.

Verizon shares were little changed at $49.44 on Tuesday afternoon.

Reporting by Malathi Nayak; Editing by Andrew Hay

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