AT&T will shed 12,000 people, equal to 4% of the company’s total employees, officials said today.
The company cited “economic pressures, a changing business mix and a more streamlined organizational structure.”
The layoffs will begin this month and continue into 2009, along with AT&T taking a charge of around $600 million against fourth-quarter 2008 results because of severance pay. However, people are still being hired in unspecified roles for broadband, video and wireless positions, the company stated.
In its recent third-quarter results, AT&T earned $3.2 billion on revenue of $31.3 billion, with 2 million new subscribers. The operator said it has 74.9 million customers in total and $9.3 billion in cash.
AT&T also sold 2.4 million units of the Apple iPhone in the third quarter. The smartphone has remained a hot item despite increasing challenges from Nokia, Research In Motion, Samsung and others.
The layoffs are AT&T’s second round this year. In April, the company trimmed 4,650 people from its wireline business.
“Wireless is not discretionary spending these days. People are not going to give up their wireless phone or their broadband modem. They’re going to give up their landline,” said analyst Ian Gillot of iGR. The wireless industry is sturdy but not recession-proof, although being a large company with a large amount of cash is a good thing right now, he added.
However, simple consumer acts such as delaying a phone upgrade by one month can easily dent carrier sales and cause more setbacks if the economic recession gets worse, he noted.
