WorldCom May Cut 16,000 Jobs
Struggling WorldCom Inc. plans to cut up to 16,000 jobs and abandon its wireless resale business to help stabilize the telecommunications firm’s finances.
The layoffs--equal to 20% of WorldCom’s worldwide work force--would be the largest in a string of payroll cuts at the company.
Last year, WorldCom eliminated 9,000 jobs, and in April the company cut an additional 3,700.
WorldCom, based in Clinton, Miss., declined to confirm reports about the latest cutbacks, but a company source acknowledged that it was planning to slash about 16,000 jobs to further reduce costs.
On Wednesday, WorldCom announced it would quit the wireless resale business, a move that had been expected since early this year, when WorldCom executives began an aggressive restructuring to ease investor fears that the company might end up in bankruptcy.
WorldCom is the nation’s largest reseller of wireless phone service, with nearly 2 million customers and about $1 billion in yearly sales.
But WorldCom did not own a wireless network, so it had to buy space on competitors’ systems, which made the operation more complicated and expensive for WorldCom to manage.
In a statement, the company said several rival carriers were interested in the wireless operation. A WorldCom manager in the Los Angeles area said the company had begun to shut down the wireless business.
A few weeks ago, the company told California managers that it planned to eliminate distributorships, abandon leases and close at least 45 of its 600 retail outlets for wireless service by July.
In addition, WorldCom is considering closing a major technical support and network design facility in Los Angeles, an operation that employs about 1,500 people, according to the manager, who did not want to be identified. The company has declined to comment on those reports.
Earlier this year, WorldCom reduced its earnings and sales projections and announced plans to slash capital spending. The company also acknowledged that the Securities and Exchange Commission was investigating its accounting and loans to executives.
John Sidgmore, who took over as chief executive when founder Bernard J. Ebbers resigned April 30, has said he would eliminate or sell non-core businesses, renegotiate lending agreements and take other steps to raise cash and reduce debt. Sidgmore has said the firm would cut $1 billion in expenses this year.
Last month, WorldCom announced plans to eliminate its MCI tracking stock, which traded separately. The move will save WorldCom more than $284 million in annual dividend payments.
