Layoffs, Transfers Anticipated : Future Uncertain for Thousand Oaks GTE
Is GTE getting ready to announce layoffs at its California headquarters in Thousand Oaks?
Employees think so. Analysts on Wall Street think so. For the moment, GTE won’t say what is going to happen.
Back in March, GTE Corp., the Stamford, Conn.-based telecommunications giant, announced plans to consolidate its seven local phone companies--including GTE California in Thousand Oaks--which provide local telephone service in 31 states.
To reduce costs, GTE Corp. is expected to move most general office functions--such as billing and marketing--to one central headquarters and four regional offices. An announcement is expected in mid-June.
“I think we can make our corporation and all of our operations significantly more cost effective,” said James Broadhead, president of GTE telephone operations and the executive overseeing the consolidation program. “We’re trying to ensure we are going to be a cost-effective corporation.”
Dallas Area May Be Hub
GTE, which made $1.1 billion on sales of $15.4 billion in 1987, refuses to say how much it wants to cut in costs. But Frank Governali, a Kidder Peabody analyst, said the target is between $300 million and $400 million.
Analysts said GTE’s Thousand Oaks office--which employs 2,450 administrative and engineering workers--isn’t in the running for the new headquarters office. Instead, analysts expect GTE to make the Dallas area the hub for its telephone operations.
Analysts expect some of GTE’s Thousand Oaks employees will be laid off and others transferred. Nobody--from GTE or Wall Street--is willing to venture a guess as to how many.
“Could we do it with zero people? I don’t think so,” said Tom Leweck, a GTE spokesman in Thousand Oaks. “Do we need all 2,000? Obviously some of those can be consolidated.”
Leweck added that the Thousand Oaks employees “who provide service directly to the customers will be pretty much unaffected by this restructuring.”
Analysts say GTE California will be named the regional headquarters for GTE in the western United States, which will include Hawaii, California and the Northwest. If so, it would lessen the severity of any layoffs at Thousand Oaks.
Charles Crain, president of GTE Hawaiian Tel, has been named president of the western territory. Hawaiian Tel, in a press release, said headquarters will be “likely centered in California.” But a spokesman for GTE in Stamford, Conn., denied that any regional headquarters have been selected.
Pessure to Cut Costs
Some GTE California employees already are looking for other jobs. “We’re getting a fair number of people at GTE saying they’re interested in making a move because of the reorganization,” said William Mangum, president of Thomas Mangum Co., an executive recruiting firm in Los Angeles.
GTE’s telephone operations have gotten mixed reviews. “GTE is not an efficient telephone company compared to a Bell Atlantic, Ameritech or other regional phone companies,” said Jack Grubman, an analyst with Paine Webber. “They have a long way to go.”
As for GTE California, there is little doubt it will soon be a leaner company.
Consider that GTE California charges residential customers higher rates than its major competitor, Pacific Bell. GTE charges a flat service rate to residential customers of $9.75 a month; Pac Bell charges $8.25. “There is no way we can be price competitive if our costs are higher. To ensure our prices can be competitive, we have got to reduce our costs,” Leweck said.
When GTE California asked its large business customers how many of them were satisfied with their phone service in 1987, only 64% said they were, according to an internal company survey. By comparison, Pac Bell claims a recent survey found that 98% of its big business customers are happy with their service.
To make matters worse for GTE California, it is facing a big rate reduction. Last year GTE California made a profit of $362 million on sales of $2.9 billion. But the field staff for the California Public Utilities Commission thinks that prices charged by GTE California are too high and it has recommended a $530-million rate reduction. GTE California has appealed the rate reduction.
“The rate reduction is one reason GTE’s stock hasn’t done well,” said Robert B. Morris III, a Prudential-Bache Securities analyst. GTE’s stock closed Monday at $35.75 a share, down from its 52-week high of $44.75.
