Verizon's Name Gets Known Amid Strike: David Wilson Princeton, New Jersey, Aug. 8 (Bloomberg) -- Verizon
Communications Inc. is in the midst of a month-long effort to
familiarize people with its name. It's receiving a lot of help
from the news media.
Journalists across the country are pointing out to television
viewers, radio listeners and newspaper readers that Verizon is the
new name for the combined Bell Atlantic Corp. and GTE Corp.
They have to. Otherwise people might not fully understand the
story that's led to most of those references: a strike by about
87,000 unionized workers at the largest U.S. local- and mobile-
telephone company, now in its third day.
Nor would they appreciate the significance of the company's
plans to expand by buying one company and combining with another,
the slower growth in earnings per share that it expects because of
those moves, or even its second-quarter results.
Verizon's shares slid 5.8 percent between June 30, when Bell
Atlantic completed its $75 billion acquisition of GTE and changed
its name, and yesterday. They fell as much as 12 percent today
after the company disclosed the plans and numbers.
Spending Millions
The companies unveiled the name Verizon, pronounced with
emphasis on the letter i, when the wireless venture started in
April. As they described it back then: ``The new name comes from
the Latin word `veritas,' which means truth, and also connotes
certainty and reliability; and `horizon,' which signifies the
possibilities ahead.''
Last week, the combined company said it would start ``an
intense branding campaign,'' consisting of radio and television
commercials, print and Internet advertising, and outdoor ads. The
campaign, featuring Verizon employees, will run through August.
The outlays for that effort come on top of the $50 million
that the wireless venture planned to spend to promote and market
its new name, Verizon Wireless.
The Bell Atlantic and GTE names aren't entirely going away
yet, though. Verizon said it expects to take 18 months to place
its new corporate name on some 57,000 vehicles, 250,000 public
phones, 3,000 buildings, millions of phone bills, and Web sites.
Neither are the labor issues that Bell Atlantic faced before
changing its name. The New York-based company began negotiations
with the Communications Workers of America and the International
Brotherhood of Electrical Workers on June 26, four days before
completing the GTE takeover.
Points in Dispute
The unions represent employees in the former Bell Atlantic
service area, stretching from Maine to Virginia, who install and
repair phones and provide services such as directory assistance.
Their two-year contract, covering about one-third of Verizon's
260,000 workers, expired Saturday at midnight.
Although the two sides have made progress in resolving
differences over pay and benefits, they have yet to agree to
issues of job security and the use of outside contractors. The
unions want to limit the company's ability to shift work among
different parts of its business.
In addition, the CWA wants to make it easier for employees of
Verizon Wireless to organize. About 50 of the 30,000 people
working for the company are union members.
The CWA is holding separate talks with the wireless company,
owned jointly by Verizon and the U.K.'S Vodafone AirTouch Group
Plc. Verizon manages the business, and holds a 55 percent stake to
Vodafone's 45 percent. It has about 25 million customers, or about
the same number that Verizon serves in the 13-state area affected
by the strike.
Shares of Verizon gained 2 percent yesterday, the first
trading day after the strike. After the company announced its
Internet business plans and financial projections, though, the
stock lost that gain and a lot more.
New Numbers
Verizon said today that it will merge its business of
providing high-speed Internet access over telephone lines with
NorthPoint Communications Group Inc., which will get $450 million
in cash from the company. NorthPoint's shareholders will receive
another $350 million. Late yesterday, the company said it will buy
OnePoint Communications Corp., a provider of services to apartment
buildings, for $250 million in cash.
Because of the transactions, the company said it expects
earnings per share to increase 5 percent to 6 percent in 2001,
rather than 9.5 percent to 11.5 percent as targeted.
In addition, Verizon changed its earnings per share target
for this year to $2.90 to $2.94. The range is below an average
estimate of $3.15 a share among analysts polled by First
Call/Thomson Financial.
The company posted second-quarter profit from operations of
72 cents a share, up from 67 cents in last year's quarter. A gain
from pension settlements increased the latest per-share number to
81 cents, about even with the average estimate of 82 cents in a
First Call survey.
Even after these numbers go into the history books, the labor
talks will hang over the company. That means more stories about
Verizon, and more mentions of its name and background that aren't
part of the ``branding'' campaign. Company executives will have to
console themselves with the old saying that the only bad publicity
is no publicity.
--David Wilson in the Princeton newsroom (609) 279-4085 or
dwilson@bloomberg.net with reporting by Dana Cimilluca in
Princeton jmg/ad/jmg |
