Verizon’s Reckoning: A Tale of Pennies Pinched & Customers Lost

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Now, I reckon there’s a lesson to be learned from the doings over at Verizon (VZ +11.83%). Seems they had themselves a notion, a bright idea if you will, to squeeze a little more juice out of the turnip by raising prices. A fellow can’t blame a business for wanting to prosper, mind you, but there’s a difference between a fair profit and downright pilfering. And pilfering, gentle readers, is what they stumbled into.

Their new chief, Mr. Schulman, a man who appears to possess the uncommon virtue of common sense, confessed as much. He admitted, plain as the nose on your face, that this habit of reaching for the customer’s pocket with one hand while offering little in return with the other, drove folks away in droves. A right smart number, in fact – some 2.25 million customers, to be precise. That’s a heap of folks, enough to populate a good-sized state, all voting with their feet, or rather, their pocketbooks.

While AT&T and T-Mobile were busy collecting new subscribers like a farmer gathers apples, Verizon was watching theirs wander off. They lost ground, quarter after quarter, a slow leak in the hull of a mighty ship. It’s a curious thing, you see, how a business can think it’s building a fortress by charging more, when all it’s really doing is digging its own moat.

Now, Mr. Schulman seems determined to right this ship. He’s declared an end to this nickel-and-diming game, promising to win back customers with something other than a higher bill. A sensible notion, I say, though whether it will work remains to be seen. It’s a bit like trying to fatten a hog by withholding slop – a fool’s errand, if you ask me.

The Cost of a Penny Saved

Over the past three years, Verizon’s churn – that’s the fancy Wall Street term for customers leaving – crept up by a quarter of a percentage point. Sounds small, doesn’t it? But let me tell you, a single drop can wear away a stone, given enough time. Every one-hundredth of a percent increase, Mr. Schulman explained, meant 90,000 fewer folks sticking around. Add it all up, and you’ve got a loss of 2.25 million. That’s a fortune, lost not to competition, but to simple foolishness.

The price hikes weren’t the only culprit, mind you. But they were a mighty big one. They raised prices four times in a single year, tacking on fees here and there. It’s a bit like a highwayman demanding a toll for a road that’s barely passable. Folks will grumble, and eventually, they’ll find another route.

“We will not rely on empty price increases,” Mr. Schulman declared, and good for him. “That is not a sustainable financial model.” He’s right, of course. You can’t build a lasting business on trickery and greed. It’s like building a house on sand – it’ll crumble eventually. Price increases must be matched with value, with something worth paying for. Otherwise, you’re just robbing Peter to pay Paul.

They’re expecting wireless revenue to be flat this year, a consequence of stopping this squeezing game. But they’re hoping to add between 750,000 and 1 million new customers. That’s a good sign, a glimmer of hope. It shows that folks will stick with a business that treats them fairly. It’s a simple principle, really, but one that many seem to have forgotten.

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A Wager on a Turnaround?

The market, that fickle beast, reacted favorably to this news. Shares of Verizon surged, as investors bet on this turnaround. It’s a curious thing, you see, how easily the market can be swayed by a promise of change. They overlooked the weak revenue forecast, focusing instead on the potential for growth.

Now, I’m not one to tell folks what to do with their money. But if you’re looking for a stock that might offer a bit of a return, Verizon might be worth a look. It’s trading at less than 10 times its estimated earnings, which is a reasonable price. It’s not a sure thing, mind you. But with a viable strategy in place, it’s not a bad wager. It’s a bit like planting a seed – you never know for sure if it will grow, but if you tend to it carefully, you might just reap a harvest.

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2026-02-01 16:12