VZ
Verizon Communications INC
NYSE
8-K: Verizon Records $5.8 Billion Goodwill Impairment Charge in Business Unit
Sentiment:
8-K Filing
17 January 2024 8:00 AM
Verizon has recorded a $5.8 billion non-cash goodwill impairment charge in its Business reporting unit due to lower financial projections.
Worse than expected
The company recorded a significant $5.8 billion goodwill impairment charge, indicating a substantial reduction in the perceived value of the Business unit.
Summary
- Verizon's Business Group experienced revenue declines due to secular trends, competition, and macroeconomic pressures.
- A five-year strategic planning review resulted in lower financial projections for the Business unit compared to the previous cycle.
- The revised projections led to a goodwill impairment test, which determined the fair value of the Business unit was less than its carrying value.
- Verizon recorded a non-cash goodwill impairment charge of approximately $5.8 billion in the fourth quarter of 2023.
- The goodwill balance of the Business reporting unit is now $1.7 billion as of December 31, 2023.
Sentiment
Score: 3
Explanation: The document reports a significant impairment charge and lower financial projections, indicating a negative outlook for the Business unit.
Negatives
- The Business Group experienced secular declines in wireline revenue.
- The company faced continuing competitive and macroeconomic pressures.
- The five-year strategic planning review resulted in lower financial projections.
- A $5.8 billion non-cash goodwill impairment charge was recorded.
Risks
- The Business Group faces ongoing secular declines in wireline revenue.
- The company is experiencing continued competitive and macroeconomic pressures.
- Lower financial projections for the Business unit may impact future performance.
- The goodwill impairment charge indicates a significant reduction in the perceived value of the Business unit.
Future Outlook
The document does not provide specific forward-looking statements, but the lower financial projections for the Business unit suggest a cautious outlook.
Industry Context
The impairment charge reflects challenges in the telecommunications industry, particularly in wireline services, due to changing technology and increased competition.
Comparison to Industry Standards
- Goodwill impairments are not uncommon in the telecommunications industry, especially when facing technological shifts and increased competition.
- Companies like AT&T have also faced similar challenges in their legacy wireline businesses, leading to asset write-downs.
- The size of the impairment charge suggests a significant reassessment of the long-term value of Verizon's Business unit, which is comparable to other large telcos facing similar pressures.
Stakeholder Impact
- Shareholders may react negatively to the large impairment charge.
- Employees in the Business unit may experience uncertainty due to the reassessment of the unit's value.
- Customers may not be directly impacted, but the long-term strategy of the Business unit could change.
- Creditors may reassess their risk exposure to Verizon.
Key Dates
- January 17, 2024: Date of the 8-K filing and earliest event reported.
- December 31, 2023: Date of the goodwill balance of the Business reporting unit.
Keywords
goodwill impairment, Verizon Business Group, wireline revenue, strategic planning, financial projections, macroeconomic pressure, competitive pressure
VZ
Verizon Communications INC
NYSE
Sector: Communication Services
Filings with Classifications
Worse than expected
7 April 2025 4:06 PM
Proxy Statement
- The 2022-2024 PSU awards vested at 0% due to not meeting performance targets.
Worse than expected
11 March 2025 8:45 AM
8-K Filing
- Verizon expects lower postpaid phone net additions in Q1 2025 due to increased churn and flat to slightly down gross additions.
Worse than expected
12 February 2025 10:19 AM
Annual Results
- The Business segment experienced a revenue decrease of 2.0% due to declines in Enterprise and Public Sector revenues.
- Wireless equipment revenue in the Consumer segment decreased by 5.1%.
Better than expected
24 January 2025 6:55 AM
Quarterly Report
- The company's fourth-quarter results exceeded expectations with strong customer growth and revenue increases.
- The full-year EPS of $4.14 was significantly better than the $2.75 reported in the previous year.
- The free cash flow of $19.8 billion was better than the $18.7 billion reported in the previous year.
Worse than expected
25 October 2024 9:36 AM
Quarterly Report
- Net income attributable to Verizon decreased significantly year-over-year, indicating worse than expected profitability.
- The company incurred a substantial severance charge of $1.7 billion, negatively impacting the bottom line.
Better than expected
22 October 2024 9:14 AM
Strategic Update
- Verizon exceeded its fixed wireless subscriber target 15 months ahead of schedule, indicating better than expected performance.
Worse than expected
22 October 2024 7:00 AM
Quarterly Report
- Consolidated net income decreased year-over-year due to severance charges.
- Earnings per share decreased year-over-year.
- Adjusted EPS decreased year-over-year.
Worse than expected
12 September 2024 10:00 AM
Current Report
- The document details significant charges that will negatively impact the company's financial results for the third quarter of 2024.
Delay expected
9 September 2024 5:24 PM
Merger Announcement
- The closing of the Frontier deal is estimated to take some 18 months.
Better than expected
9 September 2024 5:23 PM
Merger Announcement
- The acquisition is expected to be immediately accretive to revenue and EBITDA, and accretive to EPS and cash flow within a year, indicating better than expected financial outcomes.
Delay expected
5 September 2024 5:18 PM
Merger Announcement
- The transaction is expected to close in approximately 18 months, subject to regulatory approvals and other conditions.
Delay expected
5 September 2024 5:17 PM
Merger Announcement
- The transaction is expected to close in approximately 18 months, subject to regulatory approvals and Frontier shareholder vote.
Better than expected
5 September 2024 6:56 AM
Merger Announcement
- The transaction is expected to be accretive to Verizon's revenue and Adjusted EBITDA growth rates upon closing.
- Verizon expects to realize at least $500 million in run-rate cost synergies by year three.
Delay expected
5 August 2024 4:10 PM
Debt Exchange Offer Announcement
- The early participation date was extended from August 2, 2024 to August 19, 2024.
Worse than expected
25 July 2024 9:52 AM
Quarterly Report
- Net income attributable to Verizon decreased slightly compared to the same period last year.
- Wireless equipment revenues decreased by 6.5% year-over-year, indicating a decline in device sales.
- The company's Business segment saw a decrease in operating revenues of 2.4%.
Worse than expected
25 April 2024 9:00 AM
Quarterly Report
- Net income attributable to Verizon decreased compared to the same period last year, indicating worse than expected results.
Worse than expected
23 January 2024 7:00 AM
Quarterly Report
- The company reported a net loss of $2.6 billion for the fourth quarter, compared to a net income of $6.7 billion in the same period of 2022, primarily due to a $7.8 billion pre-tax loss from special items.
- Full-year 2023 earnings per share (EPS) was $2.75, compared with $5.06 in 2022.
- Adjusted EPS for the fourth quarter was $1.08 compared to $1.19 in the prior year period.
Worse than expected
17 January 2024 8:00 AM
8-K Filing
- The company recorded a significant $5.8 billion goodwill impairment charge, indicating a substantial reduction in the perceived value of the Business unit.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.