SAN FRANCISCO (MarketWatch) -
Verizon Communications Inc. is overhauling its retirement benefits as it
plans to close its acquisition of MCI Inc. in the coming weeks.
Shares of Verizon tacked on 3 cents
to $31.74 in trading Tuesday as the overall market for telecommunications
shares stalled with the Nasdaq Telecommunications Index (IXTC)
inching up more than a half-point to 187.85.
Verizon (VZ)
said managers hired after Jan. 1, 2006 will not earn pension credits. In
addition, the company said about 50,000 current managers will stop earning
such benefits after June 30, 2006.
Overall, Verizon estimates it will
save $3 billion over the next 10 years, before taxes. The new plan will
not affect current retirees.
In a statement late Monday, Ivan
Seidenberg, Verizon's chairman and chief executive officer, said
"this restructuring reflects the realities of our changing
world."
The move could add about 8 cents a
share to Verizon's annual earnings, according to analysts at Bear Stearns,
who added AT&T Corp. (T)
and BellSouth Corp. (BLS)
may adopt a similar approach to retirement benefits. (Emphasis
added)
It comes as Verizon will soon close
on its $8.4 billion acquisition of MCI Inc. Analysts at Prudential said
the pension change makes sense since MCI managers lack pension or retiree
medical benefits.
In other developments Tuesday,
BellSouth Corp. Chief Executive Officer Duane Ackerman said the phone
company sees opportunities to cut its costs further by automating certain
services and outsourcing others, according to a Dow Jones Newswires
report.
BellSouth also plans to maintain
its current amount of capital spending. Ackerman's comments were made at
an analyst meeting.
Shares of BellSouth lost 16 cents
to $27.77.