May 28, 2024

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Verizon Responds to Job Cuts

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Verizon is not publicly admitting defeat, but the company is shifting its focus, at least that was the message offered in explanation of the company’s reported decision to cut about 800 jobs in its media and advertising segment.

Dominant in the wireless industry, Verizon wanted to diversify into digital advertising and hoped to do so on a level that could go up against market behemoths such as Google and Facebook. To get a foothold in that market, Verizon purchased Yahoo and AOL, but those investments failed to pay off for the wireless company, leading to a $5 billion media devaluation as of December.

In the face of these realities, one of the first decisions made was to hire a new CEO of Verizon Media, Guru Gowrappan, who was the leader who announced the expected layoffs. In the email message announcing the staffing cuts, Gowrappan insinuated the move was not a setback, it was an opportunity.

Verizon says they now plan to “prioritize” mobile and video products in a move that keeps hope alive for the new stream of income while also keeping expectations more adjacent to Verizon’s current bread and butter. They could, presumably, market exclusive mobile products along with Verizon-sold mobile devices.

Verizon does have one major factor going for it in this transition. The company is still viewed as a bit of a crossover pioneer. While, in recent years, many telecom companies have been buying up entertainment media companies in a bid to go toe-to-toe with Amazon and Google, there really haven’t been too many breakout stars as a result of those acquisitions.

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In other words, growing pains are to be expected as the companies seek to find a business model that works. So far, many market watchers are looking at AT&T with the most expectation. The telecom company recently purchased Time Warner is a massive blockbuster media deal worth $81 billion.

That standard created a wide range of possibilities for other companies entering the hybrid mobile entertainment market, which means Verizon has a lot of wiggle room in their messaging related to efforts and expectations. The company can afford to admit setbacks while refusing to admit defeat. In effect, despite a rougher than expected outing to date, Verizon can position their communication in a way that describes the struggle as exploratory while looking ahead to different opportunities.

So far, that’s the direction the company is going into. While this doesn’t blunt the bad news for 800 staffers, it can be a salve for nervous investors and for others who are depending on Verizon to find a way to make money as their customers are buying fewer handsets and other mobile devices.