The thought of another standoff between Verizon (VZ) and its labor unions has Wall Street wincing.The nation's largest local phone company and one of its biggest unions have begun talks over agreements set to expire this summer. As usual, management and labor don't exactly see eye to eye, with each side hurling invective about the other's demands. With two union contracts covering some 80,000 workers hanging in the balance and Verizon facing setbacks on a number of other fronts, investors can be forgiven for squirming a bit about the prospect of further acrimony. After all, Verizon and its regional Bell peers have sat out much of the spring rally that has swept across tech and telecom, as their softening core businesses and heavy debt load continue to discourage would-be buyers. And many on Wall Street remember Verizon's sharp pullback the last time it faced a strike, in the summer of 2000. Verizon shares rose 18 cents Wednesday to $40.15.
With that as the backdrop, collective bargaining with the International Brotherhood of Electrical Workers began this week, on the typical rocky terms. Verizon declared it was seeking more health care contributions and fewer absences from its workers. Union representatives said they want pay increases that reflect productivity gains, as well as unfettered access to recruit new members in the company's growing wireless unit. The current union deals expire Aug. 2. This time around, while industry watchers will be interested to see how much leverage the union has amid a weak economy and uncomfortably high 6% unemployment levels, investors will be keen to see how the market reacts.