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Verizon, MCI deal to cut 7K jobs
Verizon, MCI expect to cut about 2.6% of combined work forces; layoffs not as deep as SBC-AT&T deal.
February 14, 2005: 9:35 AM EST

NEW YORK (CNN/Money) - Verizon Communications and MCI plan to cut about 7,000 jobs from their combined work forces as a result of the acquisition announced Monday.

The 7,000 jobs represents about 2.6 percent of the companies' combined work force. Verizon (Research) said it has about 210,000, while MCI (Research) has 62,700. The companies announced a stock, cash and special dividend deal valued at $6.75 billion early Monday.

Doreen Toben, CFO of Verizon, told investors during a conference call Monday that the head count reductions will go "well beyond eliminating redundancies" and will be mainly focused on support functions such as networking, legal, sales and IT. The company presented a slide to investors showing that appeared to show about half the $1 billion in planned annual cost savings would come from payroll, but executives did not give a precise breakdown of that split.

The cuts are not as deep as the job reduction plans announced at SBC Communications (Research) and AT&T (Research), which announced their own acquisition on Jan. 31.

Those two companies anticipate cutting 10,200, which represents about 5 percent of a smaller combined work force. SBC has about 163,000 employees, while AT&T has 47,000. About 60 percent of the cost savings in the SBC-AT&T deal are expected to come from staff cuts.

Mergers and acquisition activity overall has picked up in the last two months, and that will be a driver of layoffs going forward, according to John Challenger, CEO of outplacement firm Challenger, Gray and Christmas.

"Merger/acquisition activity was the second leading cause of job cuts (in January), behind cost-cutting," Challenger said. "It will continue to be among the top job-cut reasons this year as an improving economy and increased competition force industry consolidation."  Top of page

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