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AT&T Cutting 12,000 Jobs
Company Cites Economy, Business Mix
By Amol Sharma
The Wall Street Journal
Thursday, December 5, 2008

AT&T Inc. said it will cut about 12,000 jobs, or 4% of its workforce, as the telecom provider deals with a slowing economy and increased competition in the residential market from cable companies.

AT&T said the layoffs will begin in December and run through next year.  The company will take a charge of approximately $600 million in the fourth quarter to pay severance for affected employees.  The company cut 4,600 jobs earlier this year.

Though AT&T did not specify which business units would lose jobs, the side of the company that provides landline service has been most impacted by the economic downturn.  "The economic pressures are impacting spending by businesses and consumers on traditional wireline service," said AT&T spokesman Michael Coe.

That trend has exacerbated the ongoing challenges AT&T and rival Verizon Communications Inc. face as consumers drop landline service in favor of wireless or switch to competing home phone services from cable providers.  Other companies in the telecom industry are feeling the pinch, including Sprint Nextel Corp., which recently began offering voluntary buyouts to employees in non-customer facing jobs.

AT&T said it would also continue to hire in areas that are seeing faster growth, such as wireless and its nascent TV service.  The company declined to specify what the net job reductions would be in 2009 when that hiring is factored in.

Mr. Coe said AT&T is restructuring its workforce in line with an organizational re-alignment it completed earlier this year, in which it boosted the profile of its wireless unit.

AT&T also said it plans to reduce its capital expenditures next year, but it won't offer specific guidance until it announces fourth quarter results in January.

AT&T isn't the first telecom to cut back staff recently amid the economic turmoil.  Telecom Italia SpA said Thursday it would cut 4,000 more jobs, on top of 5,000 cuts it announced in June.  Nortel Networks Corp. said last month it would cut 1,300 jobs.  Equipment maker Nokia Siemens Network, a joint venture between Nokia Corp. and Siemens AG, said last month it is nearly finished cutting between 10% and 15% of its global workforce.

—Kerry E. Grace contributed to this article.
Write to Amol Sharma at amol.sharma@wsj.com

http://online.wsj.com/article/SB122839807311679257.html