How did Verizon's cost-cutting measures affect 2024 profitability?

Verizon's cost-cutting measures had a significant impact on its 2024 profitability, though the effects varied across different financial metrics. 1. **Severance Charges and Restructuring Costs**: Verizon incurred a substantial pre-tax charge of $1.9 billion in Q3 2024, primarily related to severance pay, as part of its voluntary separation program. This charge is a direct result of the company's cost-cutting initiatives. 2. **Impact on Profitability**: Despite these significant costs, Verizon's focus on cost optimization and restructuring is a strategic response to intense competition and the need to streamline operations. The company's adjusted EPS, excluding special items, was $1.32 in Q3 2022, compared to $1.42 in the same quarter of 2021, indicating a slight decline in profitability on a per-share basis. However, total revenue increased by 4.0% year-over-year, reaching $34.2 billion, which is a positive sign for overall profitability. 3. **Return to Profitability**: Verizon's cost-cutting measures are part of a broader strategy to boost profitability. The company has reported strong free cash flow and has made significant investments in areas like broadband expansion and 5G deployment, which are expected to enhance its market position and long-term profitability. 4. **Dividend Stability Amid Challenges**: Despite the cost-cutting measures and the associated charges, Verizon maintained its quarterly dividend, reflecting financial stability and a commitment to shareholder returns. The company distributed over $11.2 billion in cash dividends in 2024, demonstrating its ability to generate cash while returning value to shareholders. In conclusion, while Verizon's cost-cutting measures led to a one-time significant charge in 2024, the company's strategic initiatives are likely to have a positive long-term impact on profitability by streamlining operations and focusing on growth areas like broadband and 5G. The company's dividend stability and financial investments further support this view.