In the midst of the latest financial crisis, Verizon received $1.5 billion thanks to two federal bailouts

In the midst of the latest financial crisis, Verizon received $1.5 billion thanks to two federal bailouts
We have quite an interesting news that doesn't speak highly of Verizon's CEO Ivan Seidenberg. According to a Washington Post article, Verizon did receive $1.5 billion in two separate federal bailouts in the midst of the financial crisis. This is the very same "we-are-not-taking-money-from-the-gov" Verizon, which sounds weird because its CEO - Ivan Seidenberg - bashes "a lot of really bad business models created by the government" in a Wall Street Journal interview dated October 14, 2008.

A Verizon spokesperson commented that this was "an extraordinary time," adding that "there was no credit available otherwise (at the time)". Of course, it's not particularly surprising that a CEO of a big corporation is defending it in every way possible, but it raises questions about the financial stability of the US carriers. What's your opinion on this revelation?

source: Washington Post and WSJ via Electronista

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24 Comments

23. Re: VZW vs VZ unregistered

Echoing some of the more informed posts, please bear in mind that Verizon Wireless is partially owned by Verizon Communications, but is a separate entity. Verizon Wireless has more than enough money to pay the relatively paltry costs associated with its voluntary move to repay $1.99 charges made in error; in fact, it had the capital in hand to purchase its LTE spectrum largely without incurring debt. Although its financials are not public, VZW remains one of the most profitable wireless companies in the world, requiring and recieving no government bailouts whatsoever. Verizon Telecom (the country actually referred to here), is hardly going out of business, but the last 5 years have been economically painful for it, and mean it has essentially no cash reserves. Although it is and was solvent, the market crash meant that there was no credit available; given this set of circumstances, the government made a variety of low interest loans as part of the bailout package. VZ's were repaid. Think about it this way: you earn a paycheck and pay your bills regularly, but you use a credit card. If two days before you got paid, all of your credit cards were frozen... you might not have the money to pay your bills due tomorrow. You're getting the money, but without credit, you're screwed. Hope it makes sense to everyone.

20. Gawain

Posts: 452; Member since: Apr 15, 2010

Also, again to the editors of PhoneArena - do you read these articles before you commentate on them? Seidenberg isn't defending any of this. The article you cite makes no mention of the carrier defending such actions, and if you took the time to review the carrier's financials, you would notice that they weren't in jeopardy. If you had a clue as to how companies issue debt, and manage their credit facilities, you would know that a lot of this was not to "save" the companies, rather to stabilize how they conducted their business with continuity. It said it right here: "... to ease the market for commercial paper, a form of short-term debt used by major corporations to fund their daily activities." You (editors) need to read these articles carefully before just putting forth such off-the-mark commentary and conjecture. These Fed actions had little-to-nothing to do with "bailouts" and everything to do with allowing the banking system to continue functioning while the Wall Street gang pulled their collective heads out of their *sses.

24. Re: VZW vs VZ unregistered

Well put, Gawain... and seriously, PhoneArena editors, you should include a little more description of the situation in these cases, the article as written does tend to mislead.

19. Gawain

Posts: 452; Member since: Apr 15, 2010

Given that this company has gross revenues in excess of $100B per year, this "credit facility" of $1.5B is insignificant. Major corporations revolve all sorts of debts, cash flows, etc. Also bear in mind, this was not "stimulus" money. This was the Federal Reserve acting directly where traditional banking facilities had stopped. All this is coming to a head because of new disclosure rules. I don't like any of it now, and I didn't like any of it then. I believe that conditions could have been put in motion to allow the marketplace to heal itself, without direct government action, or the Fed printing trillions of dollars into the system (which this article is only talking about $3.3Tr, expect to see future reports topping $8-9Tr).

16. too_bored unregistered

Do your homework peeps before posting any stuff here. VZW has been making money for its parent companies. VZW profit is what bought Alltel and now building LTE. Do your homework. Plus, VZW is a for profit organization, not charity that gives free service.

14. tbar

Posts: 34; Member since: Jan 18, 2010

Say what you want, integrity is integrity and they don't have any.

13. phones unregistered

There is a big difference in a company and a parent company...........

11. knuckleballer34

Posts: 119; Member since: Jul 27, 2009

Say what you want about Verizon and or Seidenberg, but why wouldn't they accept $1.5 billion from the government? Verizon is in business to make money. At&t would have done the same. Apple would have done the same. It's easy for Verizon or any company to come out and say "we aren't taking money from the government," because it's a marketing ploy designed to show the consumer how strong the company is. Verizon taking money does not indicate any structural weaknesses, look no further than their quarterly profits. Taking money from Uncle Sam was a smart business move; if your in business to make money, why refuse it? This was smart of Verizon and Seidenberg. I could care less what they tell the people up front; behind closed doors, these guys are out to make money. This move means nothing about the financial stability of Verizon; and conversely, of the other U.S. carriers, since no data was provided toward other networks receiving money from the government.

12. Eric unregistered

I think this is less about the stability of Verizon then it is the fact they came out and said they wouldn't take money when they took 1.5 BILLION dollars...

5. Fanboykiller unregistered

OK now i see where's the money for LTE expansion come from, YOUR AND MINE TAXES.....!!!!!

7. VZW Sales Rep unregistered

You people should get your facts straight. The money that is invested in Verizon Wireless comes from its own business ventures. Lowell McAdam is the CEO. Verizon Communications does not support Verizon Wireless. We actually keep Verizon Communications going. So please get your facts straight. People always believe things without researching. Research VZW before you start complaining.

9. Prince_Soul unregistered

The thing is though Verizon Wireless is being fined and sued for the $1.99 charges which adds up to a lot money, as well as the LTE upgrades which is costing millions; Verizon also hasn't paid Vodafone in years and Vodafone owns 48% of Verizon Wireless, so please tell us how Verizon wireless keeps Verizon Communications moving?

10. zerovampire311

Posts: 42; Member since: Jun 22, 2009

Look up financial reports for VZW. The company is turning higher profits year over year. Granted, this is largely because they've cut pay on the vast majority of their workers (excluding executives), making them miserable to work for. I am curious though, where have you heard Verizon hasn't paid Vodafone? (Also, 45% ownership) Though most anyone who works for VZW and follows their politics knows Wireless carries the communications division. VZC has been selling off the majority of their land line phone service to local providers to recoup costs, and because land line service isn't very profitable anymore.

3. newfdog 13

Posts: 64; Member since: Mar 06, 2010

When large corporations are geared towards greed, they don't care how to raise profits and line their pockets. And here's what the general public doesn't understand: 'why would they take a bailout if they don't need it???'. Because the gov't programs were designed by idiots for idiots, it was made available to all companies doing business in the US. Notice how I did not say "American" companies? (Foriegn companies did in fact also take US bailout funds. Look it up, the proof is there) Any company, like Verizon, who took the money, when they didn't in fact need it, did it because it was cheap to get a bailout loan that had little or no interest attached to it. Verizon's cash is tucked away in accounts that generate interest, so why not use someone else's money without paying any interest? Make sense yet? It's all about greed, not people. And this is coming from a person who is all for cortporate America, me.

2. VerizonDoesn't=VZW unregistered

This is Verizon Communications not Verizon Wireless obviously... but for some reason I see that being overlooked and not understood

6. fwinst

Posts: 64; Member since: May 08, 2010

As he is the CEO of VZW's parent company, your comment is rather irrelevant. Any monies taken by the parent company would be used to bolster all its entities, including VZW.

8. VerizonDoesn't=VZW unregistered

Why would Verizon Communications upon receiving this money, waste it on something that's self reliant and making billions on it's own? Verizon Communications was the company that needed bailed out, and owns 51% of Verizon Wireless, so let's think about this... Let's say you and I buy a Ocean side condo we plan on selling down the road... Uh Oh, you stop making money and you are in personal financial trouble, but your wonderful family is nice enough to front you 50,000$ dollars because they love you oh so much! Do you use that 50k to increase the value of that nice ocean side property we bought, so I can make 49% of the profit from your investment? Or do you spend it on your own personal debt and interest to get you back up on your feet? It's not complicating, i guarantee Verizon Wireless didn't see a dime of this

22. MR ALWAYS RIGHT unregistered

it was a bailout for the telecom side moron. VZW is owned by Verizon Communications and Vodaphone, not "Verizon". They took this to save a business that employed 50,000. Look up that companies stock and subscribes, its dwindling.

1. YouLostTheGame

Posts: 441; Member since: Dec 11, 2008

This pisses me off! I am normally a supporter of VZW, but this makes me think twice; especially since he is now a hypocrite. Not all corporate people are like this however, but it does put a sour taste in one's mouth.

4. clevername

Posts: 1436; Member since: Jul 11, 2008

Don't think he's a hypocrite now. He's been one for a longtime now.

15. smpdx

Posts: 127; Member since: Nov 02, 2010

Wont buy chevy because they took a bailout Now I wont ever get Verizon for taking money from us. This is ridiculous. They are ALREADY subsidized by our government! We have been giving cell phone companies money for a long time! Now they are taking an extra cut?!?! We should all boycott them! This is ridiculous! We should not have to pay for their financial blunder.

17. Your Mother unregistered

Yeah lets all just not have cell phones and revert back to 1970 get over it. You'd take money from Uncle Sam if he offered it to you!

21. smpdx

Posts: 127; Member since: Nov 02, 2010

Actually, I wouldn't. I don't believe in asking for money from the Government. Sorry that I have standards and I don't believe in free hand outs. And I never said we should get rid of our cell phones. i only said we should boycott VZW buddy. Its that take the money that are ruining our country. getajob, right below me, is right on. So many people have taken advantage of our system and it needs to end. The government was not set up as safety net for our financial problems.

18. getajob unregistered

What about all of the people that sit on their lazy ass all day and don't contribute to society whatsoever but have more money and luxuries than us hard working Americans thanks to food stamps, welfare checks, and government supported cellphones? I'm not sure what my point us, but I guess I'm just saying that a lot of people take advantage of the governments money (our wasted tax dollars).

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