Verizon Takes $900 Million Hit Against Q2 Earnings for Go90 Shutdown, Other Charges

Verizon took a $900 million post-tax hit against earnings in the second quarter of 2018 for “product realignment” — which the company said was mostly related to its shutdown of the Go90 mobile-video service — and other one-time events.

In late June, Verizon announced it was pulling the plug on Go90, after the nearly three-year-old service never really got traction as a brand with its blend of short-form originals, live programming and licensed content. The company said Go90’s operations were combined with Oath, formed from the combination of AOL and Yahoo.

Verizon, in announcing Q2 results Tuesday, said $658 million of writedown was for product realignment mainly related to the discontinuation of the Go90 platform and associated content. The company recorded severance charges of $339 million for the quarter, along with acquisition- and integration-related charges of $120 million primarily related to Oath.

Overall, Verizon beat Wall Street’s expectations on revenue and profit for Q2. The telco reported total revenue in Q2 was $32.2 billion (up 5.4%) and net income of $4.2 billion (down 5.2%).

Adjusted earnings per share (excluding special items) of $1.20, versus EPS of 96 cents in Q2 of 2017. The net impact of Verizon’s Q2 charge after tax, was approximately $900 million, or 20 cents per share.

For Verizon’s Oath media business, revenue was $1.9 billion in the recent quarter, which the company said was relatively flat on a sequential basis.

The company’s wireless unit boosted quarterly revenue 5.5%, to $22.4 billion, as Verizon attracted more postpaid subs on unlimited plans. Total retail postpaid wireless connections increased 2.3% year over year, to 111.6 million.

The telco’s wireline business continued to decline, with revenue falling 3.4%, to $7.46 billion. In Q2, Verizon added a net 43,000 Fios Internet connections but shed 37,000 Fios Video connections “amid pressures from cord-cutting of video bundles,” the company said in its earnings announcement. It ended the quarter with 4.56 million Fios Video subs (-2.3% year over year) and 5.96 million Fios Internet subs (+3.9% year over year).