AT&T Inc. plans to lay off 4,600

AT&T to Cut Jobs in Landline Revamp

By VISHESH KUMARApril 19, 2008

AT&T Inc. plans to lay off 4,600 mostly white-collar employees, or about 1.5% of its work force, as part of a reorganization of its shrinking landline phone business.
But AT&T intends to hire back about the same number of people in jobs related to its expanding wireless, television and broadband services in coming months. As a result, it expects its total headcount to remain constant at about 310,000 in the coming year, according to AT&T spokesman Walt Sharp.
"There are parts of the business that are growing and others that are not," said Mr. Sharp, referring to the company's landline business, which continues to lose customers as people switch to phone services offered by cable operators or make their cellphones their primary service. "The jobs in the growth areas are different, and for a variety of reasons we were not able to find additional jobs within the organization for the people impacted."
AT&T will take a first-quarter pretax charge of $374 million to cover severance costs related to the layoffs. The bulk of the jobs to go will be those of managerial employees in the landline businesses who don't deal with customers, Mr. Sharp said.
AT&T is expected to shed 8% of its total access lines in 2008, estimates UBS analyst John Hodulik. That follows drops of 9% and 8% for the two prior years, he said. AT&T had 61.6 million voice-line customers as of Dec. 31.
"The company is continuing to lose voice lines and they have to adapt their cost structure to that reality," said Mr. Hodulik. "At the same time they have to invest in growth areas."
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While the number of people AT&T plans to employ will remain the same in the year ahead, the job cuts could nonetheless result in substantial cost savings in the neighborhood of half a billion dollars, estimates Mr. Hodulik.
"There will be quite a bit of cost savings in this plan since it will impact a lot of senior executives and white-collar workers, who are generally more highly paid, and replace them with guys in trucks getting U-Verse into peoples' homes," he added, referring to AT&T's television and high-speed Internet offering.
The move comes amid a broader reorganization by the phone giant to emphasize operational units rather than geographic regions. The company had internally announced plans for the reorganization and the associated job cuts in March, Mr. Sharp said, and Friday's announcement would mark a step in that direction.
"They are centralizing a lot of the functional areas. So where you had financial, marketing and other organizations on a regional basis, all of that is now being centralized," said Mr. Hodulik.
He also said that the move is part of the changes being put into play by the recent appointment of AT&T Chief Executive Randall Stephenson, who took the helm in 2007. "This is a new CEO taking a look and putting his stamp on the organizational structure."