Verizon to Take $3 Billion Charge, Maintains 2003 Guidance
{{#rendered}} {{/rendered}}
Verizon Communications (VZ), the largest U.S. local telephone company, on Tuesday said it would take about $3.0 billion in charges for a change in accounting in its telephone directory unit and the planned sale of its stake in a Mexican wireless carrier.
The New York-based company said its 2003 guidance for revenue growth and earnings, excluding one-time items, remains unchanged.
Wall Street analysts downplayed the news of the charges since the company's outlook remained unchanged.
{{#rendered}} {{/rendered}}
Verizon, like its sister Baby Bells (search), said it had changed its accounting methods for its telephone book unit to recognize revenues and expenses over the life of a directory, which is usually 12 months.
The change will allow quarterly earnings to be more evenly distributed throughout the year. Previously, revenues were recognized in the quarter in which a directory was distributed.
The accounting change will result in an after-tax, non-cash charge to earnings of about $1.6 billion, or 59 cents a share, retroactive to Jan. 1, Verizon said.
{{#rendered}} {{/rendered}}
The company will also take a second-quarter charge of $900 million, or 33 cents a share, as it writes down the value of its investment in Grupo Iusacell (search), Mexico's No. 3 wireless telephone company. Verizon is selling its Iusacell stake to Movil Access, which is owned by Mexican tycoon Ricardo Salinas.
Verizon will also take a second-quarter charge of $400 million to $500 million, or 14 cents to 19 cents a share, related to severance, early repayment of debt, and a write-down of some long-lived assets due to consolidation and integration of facilities.
Verizon previously said it expects 2003 revenues to be flat to up 2 percent over 2002, with earnings of $2.70 to $2.80 a share before special items.