“AT&T Inc. on Thursday said it would cut 12,000 jobs, or 4% of its workforce, and spend less on new equipment in 2009 in response to a weakening economy,” Jeffry Bartash reports for MarketWatch.
“Aside from a poor economy, AT&T cited streamlining efforts and a “changing business mix” as reasons for the reductions. The company noted that it’s still hiring in its stronger businesses such as wireless, video and high-speed Internet,” Bartash reports. “‘There’s an ongoing industry shift from wireline to wireless and broadband,’ AT&T spokesman Walt Sharp said.”
“Most job cuts will take place in AT&T’s traditional local and long-distance segments, which have been losing customers for years. Millions of ex-subscribers have switched to cable-phone services or Internet-phone companies such as Vonage. Others have chosen to rely exclusively on wireless, especially younger people,” Bartash reports. “‘AT&T has been losing consumer retail lines at around 10% per year due to wireless substitution and cable competition, necessitating the employee reductions,’ analyst Peter Rhamey of BMO Capital Markets wrote in a research note.”
Bartash reports, “The reductions will begin in December and continue into 2009, the company said. AT&T plans to book a onetime expense of $600 million in the fourth quarter to pay for severance and related costs… With the economy now in recession, AT&T also said it expects to devote less money to capital expenses in 2009 than it’s spending in the current fiscal year. AT&T is on track to spend roughly $17.8 billion or somewhat less on network expenses in 2008. The carrier said it will give more details when AT&T issues fourth-quarter results in late January.”
Full article here.
MacDailyNews Take: Hopefully, “spending less on new equipment in 2009″ does not shortsightedly involve AT&T’s 3G buildout. For now, as we understand it from the vague info we’ve come across, it sounds like wired resources are being reallocated to wireless which seems like a prudent move to us. Fewer telephone poles and more towers, please! We’ll know more in late January at the very latest; likely much sooner, as AT&T will probably want to tamp down the type of speculation and concern seen in our Take’s first sentence.
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