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AT&T may cut jobs
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September 15, 1999: 12:08 p.m. ET
Long-distance carrier's hiring freeze seen as first step toward reductions
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NEW YORK (CNNfn) - AT&T Corp. has imposed a hiring freeze, a company official confirmed Wednesday, in what reports indicated may be the first step toward thousands of job cuts at the nation's largest long-distance carrier.
Company spokesman Burke Stinson said the "time-out" on hiring was initiated last month after a review begun early this summer. But Stinson didn't confirm details of job reductions, saying such decisions on cuts aren't imminent.
Various reports Wednesday quoted officials at AT&T -- squeezed by narrow profit margins and swallowing several recent cable television purchases -- as saying a series of job cuts in its core long-distance business may be on the way by the end of the year.
Many of the workers who lose jobs could be re-assigned to AT&T's (T) fast-growing cable and cellular lines, but others are likely to be laid off, the reports said.
AT&T is in the midst of a $2 billion cost-cutting plan laid out earlier this year by its chairman and chief executive officer, C. Michael Armstrong. That's on top of the $1.6 billion Armstrong has slashed since taking the company helm in November 1997.
AT&T began the year with 108,000 employees, Stinson said. But last spring's buyout of the nation's No. 2 cable company, Tele-Communications Inc., has ballooned its payroll to 149,000.
Its staff is expected to grow further after AT&T closes its $58 billion purchase of Mediaone Group (UMG), another cable giant, as it reaches into the fast-growing market for broadband, or high-speed, telecommunications services.
The hiring freeze comes as AT&T, which recently announced 7-cents-a-minute billing for its long-distance customers, is seeing its share of its core long-distance market dwindle and profit margins in that segment decline.
Long distance accounts for 80 percent of the company's revenue, Stinson said. But with the expansion into cable and other businesses, the long-distance share should fall to as low as 40 percent within 4 years.
The corporate make-over stems from AT&T's ambition to tap the high-growth business of cable, which can offer customers high-speed data, video and Internet services in addition to voice. Wireless communications is also a key part of the strategy.
"The writing is on the wall for us," said Stinson. "We're betting our future on Internet protocol and broadband."
Reports of the pending job cuts in the New York Times and the Wall Street Journal on Wednesday drew relatively little reaction from investors. Shares of AT&T, one of the 30 stocks included in the Dow Jones industrial average, fell 1/8 to 44-3/8 in late morning trading.
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AT&T Corp.
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