SBC to Shed More Workers Through 2005
SBC Communications Inc. could cut more than 10,000 jobs, or 6% of its workforce, by the end of next year to compensate for a drop in local phone customers.
The reductions will come through attrition and firings, the company said in a filing Friday with the Securities and Exchange Commission.
SBC Chief Executive Edward E. Whitacre Jr. has eliminated 27,500 positions in the last three years to reduce costs as revenue from the local phone business has declined. The company’s expansion of wireless and Internet divisions has been slow to boost profitability.
SBC, based in San Antonio, said the newly announced cuts would come on top of its elimination of about 7,000 jobs in the last year primarily through “normal attrition.”
“Based on a number of initiatives to improve efficiencies, we currently anticipate there will continue to be additional workforce reductions through attrition or involuntary programs that could exceed 10,000 by Dec. 31, 2005,” the company said in the filing.
SBC has more than 50 million phone lines in 13 states and is the dominant local provider in California. A company spokesman, Larry Solomon, said the job cuts would be “across geographies and across business units.”
Solomon said the company might add workers in growing parts of its business as part of a continuing effort to adjust its workforce to business conditions.
Indeed, analysts have said SBC could shift more of its focus to such growing areas as high-speed Internet and Cingular Wireless, its joint venture with BellSouth Corp.
“Their traditional businesses are starting to erode at a rapid rate,” Albert Lin, an analyst at American Technology Research in San Francisco, told Bloomberg News. “The outlook is definitely getting tougher, and they are trying to get their business costs in line with that.”
The filing came a day after an analyst for Lehman Bros. had written that SBC could save $1.2 billion a year by cutting as many as 20,000 jobs. The analyst, Blake Bath, said SBC had more workers per phone line than others in the industry.
Under a five-year contract with the Communications Workers of America, SBC is limited in its ability to fire union workers, said union spokeswoman Candice Johnson. Firings may affect managers, she said. Union members make up 60% of SBC’s workforce.
The union agreement includes “guaranteed job offers” to employees, said Walt Sharp, another SBC spokesman, “and we will abide by those agreements.”
Before news Friday of the pending job cuts, SBC shares rose 13 cents to $26.25 on the New York Stock Exchange.
Bloomberg News and Associated Press were used in compiling this report.