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GTE unveils cost cuts
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January 19, 1999: 7:08 p.m. ET
Eyeing 13-15 percent earnings growth, phone giant plans to trim $600M a year
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NEW YORK (CNNfn) - GTE Corp. said Tuesday it will launch a new cost-cutting effort, involving unspecified job cuts, to keep the local phone giant on its growth targets and to save more than $600 million a year.
The Irving, Texas-based phone company, awaiting the conclusion of a $53 billion merger with Bell Atlantic (BEL) announced last summer, said the move involves the delay in the rollout of its nationwide expansion and is meant to keep the company on its earnings per share growth target of 13 to 15 percent in 1999.
"Our strategy consistently has been to focus on profitable growth, not growth at any cost," Charles Lee, GTE's chairman and chief executive officer, said in a statement.
Details of the job cuts, which GTE said will come mainly through attrition and "voluntary" programs such as early retirement, will be laid out later in the first quarter.
Asked how many jobs would be lost, GTE spokesman Peter Thonis said: "We haven't totally figured that out yet.
"It's not a people target, it is an expense target," Thonis said. "We do not expect a significant impact to the head-count at GTE."
The cost-cutting initiatives will cause an unspecified, one-time charge. But GTE said that will be offset by $300 million in one-time after-tax gains following a merger of Canada's Telus Corp. and BC Telecom, a company in which GTE had a 51 percent stake.
The $600 million in annual savings are expected to take place starting in the first quarter of 1999.
GTE also said it will moderate its national sales, service and marketing expansion plans, in part due to a belief its expenses will become more cost-effective after the Bell Atlantic deal is completed.
That delayed expansion, in addition to an increasingly competitive market, is expected to cause GTE revenues to grow at a slower pace than the 10-12 percent clip first expected for 1999.
GTE (GTE) shares closed up 5-3/8 to 67-7/8 ahead of the announcement on Tuesday.
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GTE
Bell Atlantic
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