Verizon Business to team with Accenture
Verizon Business will soon announce a new partnership with Accenture aimed at leveraging each other’s assets to improve sales of business telecom and professional services, first in the US and then globally, Verizon Chief Operating Officer Dennis Strigl announced this morning during the Verizon earnings call.
Strigl’s comments came during questioning by analysts of Verizon Business prospects following a fourth quarter in which total Verizon Business revenue fell 2.3% amidst falling business call volumes due to the economic downturn.
“We did see weakness in financial services and in the retail sectors in the fourth quarter,” Strigl said. “We are seeing the correlation between the significant force reductions, which are causing lower volumes. LD [long distance] usage dropped from quarter to quarter and in the fourth quarter was at the lowest level in two years. We know that will continue to have an impact in 2009 – witness the [job cut] announcements yesterday. For our part, we are still focused on driving growth where we can and enhancing long-term growth.”
Financial analyst Craig Moffett of Bernstein Research said the Verizon Business results were far worse than even his conservative expectations of 1% growth and could be a sign that “things could get much worse in 2009.” He mitigated those comments by pointing to the $120-million impact of foreign exchange on the Verizon Business results, “easily enough to distort” overall results.
Strigl said the long-term expectation is that IT departments “will seek more bandwidth and new applications and will buy our managed services, and we are well-positioned to deliver in all those areas. We continue to manage the cost side of the business, and we will continue to look for ways to partner.” In the short term, however, Verizon Chief Financial Officer Doreen Toben said Verizon Business is seeing some corporate customers delay spending decisions.
Strigl said the Accenture partnership will be formally announced very soon.
Verizon Chairman and Chief Executive Officer Ivan Seidenberg said 2009 would be a difficult year to project because of all the economic turmoil but added that he believes Verizon is positioned to perform well “absolutely and relatively to the market.” The telecom industry in general is better positioned to handle this downturn than it was the bursting of the telecom bubble several years ago, Seidenberg said.
“We have much better industry structure than we had the last time out,” Seidenberg said. “We are more consolidated, more focused, we have better products to sell into the market. There are some positives there.”
One other positive is that Verizon saw an 8% increase in sales of what it considers “strategic” business services, namely private IP services, managed services and security services.
On the consumer side, Toben touted other positives, including what she called Verizon’s “best FiOS quarter ever, with record net adds in TV and in FiOS Internet.” Verizon added 303,000 net FiOS TV adds and hit 21% penetration in areas where the service is available, adding 1.1 million homes to the availability footprint in the fourth quarter.
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