Earnings Up, AT&T; Opts to Sweeten Its Pensions

American Telephone & Telegraph Co. today announced a 19% gain in third-quarter earnings and said it is sweetening its pension program to lure thousands of managers into early retirement.

While AT&T; is not aiming to eliminate a specified number of jobs, spokesman Burke Stinson said, “It would not be unreasonable for 5,000 to 15,000 managers to take advantage of the plan.”

AT&T; will double to 34,000 the number of managers eligible to retire with immediate pension payments. It also offered a special sweetened pension plan for managers who choose to retire Dec. 30.

AT&T; embarked on an aggressive cost-cutting program beginning in 1984, the year it lost its local operating companies in the breakup of the Bell System.

Since then the company has cut its payroll from 373,000 to 298,000. This is the first program aimed only at managers.

The largest single job cut in the company’s history came in late 1986, when AT&T; eliminated 32,000 jobs. The company has relied on incentives when slashing employment, but Stinson noted that this is the first “pension sweetener” in AT&T; history.

“We are in a topsy-turvy marketplace, and we need to have as many people at the elbows of our customers as possible and as few people in non-sales, behind-the-scenes jobs as possible,” Stinson said.

The retirement option will increase expenses in the fourth quarter, but the amount cannot be determined until the number of participants is determined. The company said the higher expenses will be offset by other items, including a gain from a share exchange that ends its direct investment in Ing. C. Olivetti & Co.

AT&T; reported that profits rose 19% to $699 million, or 65 cents a share, in the quarter ended Sept. 30, from $587 million, or 55 cents a share a year ago. Revenue increased 1% to $8.9 billion from $8.81 billion in the third quarter a year ago.

AT&T; Chairman Robert E. Allen said that while the company is pleased with the results, “we are keenly aware that we face stiff competition in all our markets.”

He said AT&T; will “continue to be aggressive in the marketing of our products and services, and aggressive as well in continuing to drive costs out of every part of our business.”