The Verizon layoffs in 2017 number in the thousands as the Yahoo–AOL merger is completed, resulting in job cuts across the company. The thousands of layoffs were compounded upon by the go90 layoffs, which saw hundreds of people cut from the Verizon streaming service.
All in all, Verizon Communications Inc. (NYSE:VZ) has cut well over two thousand workers between the Yahoo layoffs that came about as a result of the merger as well as the hundreds cut from the go90 project.
The company has also suffered a poor showing on the stock market, falling about nine percent since the beginning of the year.
The telecommunications giant’s misfortune puts potentially thousands of American workers at risk. For the last decade, the company has reduced its workforce each year, and since 2007 has cut about 70,000 people from its total workforce. With the company hoping that acquisitions of assets like AOL and Yahoo will help right the ship, if the group continues to flounder, then more cuts are to be expected.
AOL-Yahoo Merger Led to 2,100 Job Cuts at Verizon’s Oath
The Verizon layoffs in June 2017 were a direct result of the AOL-Yahoo merger, where the two companies were folded into a new subsidiary called Oath. This represents about a 15% reduction of the workforce at the newly formed Oath, although that does not fully illustrate the extent of the cuts.
Yahoo had about 8,600 full-time employees as of March 31 after enduring many rounds of cuts. The company lost about 46% of its workforce in the five years that Marissa Mayer headed the company as CEO. The most recent wave happened about a year ago, when 500 people lost their jobs at Yahoo.
Yahoo had a rough go in the lead-up to the Verizon deal, with two massive data hacking scandals hurting the company’s value and putting the deal at risk, although Verizon did eventually close the agreement at $4.48 billion for the acquisition of Yahoo’s core internet business.
The remainder of Yahoo was spun off into Altaba Inc (NASDAQ:AABA), an asset-holding company. But while Altaba has surged on the market since the acquisition, VZ stock has only experienced modest gains.
The gain of then-Yahoo and now Altaba’s stock was good news for the newly laid-off employees, somewhat dampening the sting as the Oath layoffs took place, with many of the employees being granted severance packages alongside stock compensation packages.
The Verizon Communications job cuts are a bitter pill to swallow for many, however, when examined against executive compensation.
Mayer was brought in to help revitalize the waning tech giant but ultimately was only able to keep the business on life support before selling it off.
For her five years at Yahoo, Mayer left with a $264.0-million stock package. Other senior Yahoo executives who were laid off also received large severance packages, including up to two years’ pay and an accelerated vesting of all stock compensation. Many of these packages resulted in eight-digit payouts in stock value.
Verizon’s Mobile Streaming Service go90 Laid Off 155 Jobs Mostly in San Jose, California
More employees were shed from Verizon as its foray into the streaming world—go90—did not yield the results the company had hoped.
The streaming project was meant to attract younger Millennials and others who eschewed traditional cable. As such, the content on the site was meant to be skewed towards a younger audience.
The streaming service ended up cutting 155 jobs across the U.S. from the go90 project. California layoffs led the way, with many in the San Jose office getting the axe, but cuts were also made in New York and Los Angeles.
Most of the cuts were from the product development team, but also included content operations and marketing positions. The go90 team will now be headed by members of the Vessel company, an acquisition of Verizon’s back in October 2016.
“Our focus with go90 and our Verizon digital media efforts are to fulfill our strategy of leveraging Verizon content investments, enhancing user experience and strengthening our advertising infrastructure,” the company said in a statement about the Verizon layoffs in January 2017.
“Fulfilling this strategy has resulted in some duplicative resources and has required organizational changes impacting 155 employees as we consolidate offices in Los Angeles, San Jose and New York. These changes are not indicative to a change in our strategy and we remain committed to rapidly enhancing our existing online video products and delivering new products.”
The Verizon layoffs in 2017 at go90 represent a departure from the company’s initial strategy with the streaming service. Early in 2016, former Verizon CFO Fran Shammo told analysts in an earnings call that go90 would not likely be profitable for at least another two years.
That equation changed, however, as the company looked to make cuts to the service ahead of that two-year outlook due to reportedly far weaker engagement numbers than anticipated.
Richard Tom, a former Hulu CTO and Vessel co-founder, now leads the go90 engineering and operations teams as CTO of Verizon Digital Entertainment.
With many players competing in the streaming space, however, the company has to fend off rival upstarts like itself while it challenges industry mainstays like Netflix and Hulu.
“Number of employees at Verizon from 2007 to 2016,” Statista, 2017.
“Verizon Lays Off 155 Employees at Go90 Division (EXCLUSIVE),” Variety, January 23, 2017.
“Tim Armstrong sees layoffs of 15% at Oath unit created after Verizon closed its Yahoo deal,” CNBC, June 14, 2017.
“Verizon to Lay Off 2,100 Employees After Finalizing Yahoo Deal,” The New York Times, June 8, 2017.