As striking workers for Verizon (VZ) return to their posts today, shareholders of the telecom giant hope the erosion in FiOS broadband and video subscriptions -- as well as to earnings -- during the standoff will stop. If the carrier comes to peace with its workforce after the more than six-week strike, Verizon can turn its attention back to its rivals in the wireless industry.
Under a tentative pact with the Communications Workers of America and the International Brotherhood of Electrical Workers announced on Monday, Verizon agreed to boost wages by 10.5% over the four-year agreement, hire 1,400 more workers and increase pensions, among other concessions. In return, the telecom could change its healthcare plans to reduce costs and gain flexibility in offering worker buyouts.
On Tuesday, Verizon shares rose 0.6% to $50.90.
While red-shirted telecom workers marched and blew air horns, Wells Fargo analyst Jennifer Fritzsche noted in recent reports, Verizon's focus had turned from signing up new wireline clients to maintaining the network.
Fritzsche lowered her second quarter earnings per share 97 to 94 cents per share because of the strike and slower upgrades of wireless devices. She also cut full-year 2016 earnings from $3.98 per share to $3.91.
Despite the earnings dip, "the savings that should result from this strike out-weigh the near-term distraction," she wrote, suggesting that Verizon could provide more detail in its second-quarter report in July.
Likewise, John Hodulik of UBS lowered his 2016 earnings per share from $3.90 to $3.87 in May, citing expenses from the strike. As a result of the work stoppage, Hodulik now expects Verizon to lose 90,000 broadband subscribers and 40,000 pay-TV subscribers in the second quarter. Previously, he had called for a 25,000 drop in broadband users and a gain of 10,000 video accounts.