Verizon says many workers will receive shares of stock
- Verizon employees (other than top management) will receive 50 shares of restricted stock, the price of which will be set on February 1.
- Verizon reported mixed quarterly results on Tuesday.
- Verizon told investors earlier on Tuesday it expects savings from tax reform will add $3.5 billion to $4 billion to its operating cash flow this year.
Verizon says employees, other than top management, will receive 50 shares of restricted stock, the price of which will be set on February 1.
About 155,000 employees will be affected, Verizon CEO Lowell McAdam told CNBC's "Fast Money: Halftime Report" on Tuesday.
The award could total over $400 million, based on Verizon's current share price. Shares traded around $53 a share on Tuesday, down from a fresh 52-week intraday high of $54.60 after quarterly earnings were released.
The announcement comes after Verizon hinted in its morning earnings report that "employees will further share in the company's success" around tax reform. Verizon expects savings from tax reform will add $3.5 billion to $4 billion to its operating cash flow this year, boosting earnings by 55 to 65 cents a share for the full year.
"I just left the employee meeting where we decided what we were going to do with the $3.5 billion to $4 billion," McAdam said.
That's on top of a previously announced one-time increase of about $16.8 billion under the new tax scheme.
The company also plans to put money into dividends, paying down debt, philanthropy and investing in the network. Verizon is still figuring out the details of some teed-up projects, McAdam said.
"What tax reform allows is for us to go hard when we get the results we're expecting," McAdam said.
The new policies could prove to be a bright spot for a company mounting an uneasy transition into the media business. It comes as the company is expecting low single-digit percentage growth in adjusted earnings in 2018.
The telecom company reported mixed quarterly results on Tuesday. The company added more customers and grew sales, but adjusted profit was flat from a year ago.
Verizon's industry is consolidating on multiple fronts. In the media business, Yahoo and AOL are competing against concentrated media and tech giants for advertising dollars. And as the few remaining wireless providers compete for phone customers, new features like spectrum and data plans are more important than ever.
While other players in the industry are considering mergers, McAdam said that Verizon is keeping its options open as an independent company that can partner with anyone.
"Scale matters in this game, and if you're going to jump in, you don't jump in in a small way," McAdam said. "I think there's a real, legitimate strategy for being the big digital media deliverer."