Verizon Communications is to blame for the 248 employees who lost their job Thursday, officials at NorthPoint Communications said.
Approximately 19 percent of NorthPoint’s workforce, employees mainly from its offices in San Francisco and Emeryville, CA, were notified this morning of the decision to cut their jobs. They were sent home soon afterwards.
According to NorthPoint’s spokesperson, Marvin Wamble, the cuts were made across the board, affecting all areas of NorthPoint’s operations. Including, he said, losses at the senior vice president level.
Wamble also said the cuts were necessary for the company to continue its operations until an investor or buyer could be found. “There is interest in our company” out there, he said.
Liz Fetter, NorthPoint chief executive office, said Verizon’s move to end a merger between the two companies last week was illegal.
“We believe that Verizon’s actions are breaches of its agreements with NorthPoint Communications,” Fetter said. “However, as a result of Verizon’s notice of termination, we must make some difficult decisions.
“This is a very difficult time at NorthPoint Communications,” Fetter continued. “We had been expending considerable time and effort toward completing the merger with Verizon. Now, however, we must explore all options for reducing expenses, including laying off many valued employees.”
stock value dropped 73 percent after Verizon announced last week it was canceling plans to merge the digital subscriber line operations functions of the two companies. Ironically enough, news of today’s job cuts did not significantly alter its value on Wall Street, dropping only seven percent to three-eighths at midday.
The merger was canceled, Verizon officials maintain, because of NorthPoint’s increased revenue losses. An escape clause in the contract allowed for Verizon to disengage from NorthPoint if the data competitive local exchange carrier’s debt load was significantly increased.
NorthPoint officials lay the blame for low revenues on the feet of Internet service providers who are unable to pay for the DSL lines it orders. One such broadband ISP, Flashcom, lost its lines Wednesday after failing to make financial arrangements with NorthPoint.
NorthPoint and Verizon officials were unavailable for comment on the announcement at press time.