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AT&T buyouts on a tear
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June 3, 1998: 10:58 a.m. ET
'At least' 14,000 managers will retire early in surprise boost to overhaul
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NEW YORK (CNNfn) - Less than six months after it was launched, AT&T's restructuring campaign got a surprise boost Wednesday when the company said that "at least" 14,000 managers have accepted buyouts under a voluntary retirement plan announced in January.
The plan raised pensions by 20 percent and expanded benefit eligibility.
AT&T initially estimated that 10,000 to 11,000 would accept the plan, which also called for phasing out 5,000 to 7,000 non-management and managerial positions through attrition and previously announced job cuts.
AT&T Chairman C. Michael Armstrong, the company's belt-tightening new chairman, said the higher-than-expected number of departures put AT&T a year of ahead of schedule in a realignment that aims to reduce the 121,000-person workforce by as many as 18,000 workers over two years.
The workforce reduction will help cut AT&T's sales and administrative expenses from 29 percent of revenue to 22 percent by the end of 1999, saving the nation's largest long-distance carrier anywhere from $3.5 billion to $4 billion a year, Armstrong said.
AT&T earlier said it expected to take a charge of $800 million to $1.2 billion in the second quarter based on estimates that 10,000 managers would accept the buyouts. The company now says the charge will be higher, without specifying how much. AT&T said the added charges will be offset by the sale of non-core businesses.
The managerial departures will be staggered, the company said, "to ensure a smooth transition of work." Most managers will leave this year.
Armstrong's restructuring comes as AT&T and its major rivals, MCI Communications Corp. and Sprint, are feeling the competitive pinch in a deregulated marketplace.
In addition to cutting jobs, AT&T has spun off major units such as Lucent Technologies and NCR to focus on communications services.
Armstrong has accelerated the pace of change by linking pay to performance, divesting the company's non-core businesses and, more recently, making a big push into local telephone markets where it has been seeking regional pacts with Baby Bells to have them sell their customers AT&T's long-distance service.
AT&T also is in the midst of an $11.3 billion acquisition of Teleport.
Shares of AT&T (T) were up 1-1/16 at 59-3/4 in mid-morning trade Wednesday on the New York Stock Exchange.
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