Armstrong May Eliminate 15% of AT&T;’s Work Force

Three months after C. Michael Armstrong was hired to transform the industry’s gray lady into a nimbler player, he plans to revamp management and staff in a major shake-up, sources familiar with the plans said Thursday.

Armstrong’s planned realignment of AT&T; Corp. is consistent with his reputation as a manager willing to upset the status quo. But he could risk hurting morale at a company buffeted by years of realignment and retrenching.

The Wall Street Journal reported Thursday that Armstrong is planning to cut as many as 19,000 jobs, or 15% of the company’s work force. The newspaper, citing unidentified people close to the company, said Armstrong is also planning to reassign much of AT&T;’s senior management.

An announcement may come as early as Monday when Armstrong outlines his strategy for the nation’s biggest long-distance telephone company in a meeting with financial analysts, after AT&T; releases its fourth-quarter results.

AT&T; spokespersons declined to comment. But sources close to the plans confirmed that Armstrong will move quickly to help revive the long-distance phone company’s lackluster financial performance.

“There will be a major shake-up in the management ranks, essentially because of lagging performance, to get AT&T; back on a leading edge of performance,” one source familiar with the plans said, speaking on condition of anonymity.

AT&T; has said it hopes to slash about $4 billion a year from its $45 billion in annual expenses. A big staff cut is consistent with Armstrong’s history as a turnaround artist. At his previous job as head of Los Angeles-based Hughes Electronics Corp., he eliminated thousands of jobs to transform Hughes from a stodgy defense company into a fast-growing satellite business.

AT&T; shares rose 50 cents to $65.63 on the New York Stock Exchange after hitting a new high of $66.19.

The job cuts could be the biggest to hit AT&T; in a decade. AT&T; currently employs about 128,000.