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Sat, Nov 21, 2009 - 02:35 AM EST  —  AAPL: 199.92 (-0.59, -0.29%)  |  NASDAQ: 2146.04 (-10.78, -0.5%)

AT&T to eliminate 12,000 jobs, spend less on new equipment in 2009
Thursday, December 04, 2008 - 05:10 PM EST

"AT&T Inc. on Thursday said it would cut 12,000 jobs, or 4% of its workforce, and spend less on new equipment in 2009 in response to a weakening economy," Jeffry Bartash reports for MarketWatch.

"Aside from a poor economy, AT&T cited streamlining efforts and a "changing business mix" as reasons for the reductions. The company noted that it's still hiring in its stronger businesses such as wireless, video and high-speed Internet," Bartash reports. "'There's an ongoing industry shift from wireline to wireless and broadband,' AT&T spokesman Walt Sharp said."

"Most job cuts will take place in AT&T's traditional local and long-distance segments, which have been losing customers for years. Millions of ex-subscribers have switched to cable-phone services or Internet-phone companies such as Vonage. Others have chosen to rely exclusively on wireless, especially younger people," Bartash reports. "'AT&T has been losing consumer retail lines at around 10% per year due to wireless substitution and cable competition, necessitating the employee reductions,' analyst Peter Rhamey of BMO Capital Markets wrote in a research note."

Bartash reports, "The reductions will begin in December and continue into 2009, the company said. AT&T plans to book a onetime expense of $600 million in the fourth quarter to pay for severance and related costs... With the economy now in recession, AT&T also said it expects to devote less money to capital expenses in 2009 than it's spending in the current fiscal year. AT&T is on track to spend roughly $17.8 billion or somewhat less on network expenses in 2008. The carrier said it will give more details when AT&T issues fourth-quarter results in late January."

Full article here.

MacDailyNews Take: Hopefully, "spending less on new equipment in 2009" does not shortsightedly involve AT&T's 3G buildout. For now, as we understand it from the vague info we've come across, it sounds like wired resources are being reallocated to wireless which seems like a prudent move to us. Fewer telephone poles and more towers, please! We'll know more in late January at the very latest; likely much sooner, as AT&T will probably want to tamp down the type of speculation and concern seen in our Take's first sentence.


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Dec 04, 08 - 05:20 pm Comment from: Gabriel

Hopefully, "spending less on new equipment in 2009" does not shortsightedly involve AT&T;'s 3G buildout.

Ahh yes, I was optimistic like that once too... sadly, that's almost certainly where they're going to be cutting corners.

Dec 04, 08 - 05:25 pm Comment from: R2

"Hopefully, "spending less on new equipment in 2009" does not shortsightedly involve AT&T;'s 3G buildout."

Sounds to me like the job losses and spending cuts stem from the weaker landline services.

"The company noted that it's still hiring in its stronger businesses such as wireless, video and high-speed Internet. 'There's an ongoing industry shift from wireline to wireless and broadband,' AT&T;spokesman Walt Sharp said."

Business is strong with ATT Wireless, where they continue to invest.

Dec 04, 08 - 05:33 pm Comment from: qka

Well there go the guys whose job it is to hold up the AT&T;wires in my neighborhood.

But seriously, AT&T;coverage in my part of the world SUCKS! As much as I might like an iPhone, without coverage it's just a cheap iPod Touch but with a very expensive monthly bill.

If AT&T;reduces spending on equipment, don't expect coverage to get better.

Dec 04, 08 - 05:50 pm Comment from: Jake

As the article makes clear, ATT is INCREASING spending on wireless. Why would it increase spending only on employees rather than the networK? Simple answer: it won't!

Dec 04, 08 - 05:54 pm Comment from: looking for bottom

Love or hate AT&T;, when is all of this (i.e. layoffs everywhere) going to end???

If this pace keeps up, we will need government make-work projects (shudder).

Not everyone's qualified to work at Apple.... smile

Dec 04, 08 - 06:31 pm Comment from: alansky

Uh, something is definitely wrong with this picture. Another recently posted MDN article ("Analyst: AT&T;defies economic slump thanks to Apple iPhone, tempts people to spend") states:

"AT&T;Inc. may defy the recession, posting faster subscriber growth this holiday season by tempting shoppers to unclench their wallets for luxury brands like the iPhone..."

Yet AT&T;plans to "cut 12,000 jobs, or 4% of its workforce, and spend less on new equipment in 2009 in response to a weakening economy..."

HELLO? Three guesses as to what will happen if AT&T;grows their subscriber base while cutting jobs and not expand their infrastructure!

This is not a pretty picture!!!

Dec 04, 08 - 07:01 pm Comment from: MacSmiley

Sounds like we'll never get the iPhone in South Dakota. :(

Dec 04, 08 - 07:35 pm Comment from: R2

@alansky,

We're talking about two ATT's. This article is in reference to ATT the parent company and the second article, "ATT Defies Economic Slump..." is about ATT Wireless, the wireless carrier under the ATT umbrella that services the iPhone and what not.

Parent company ATT includes landline services, a business in steady decline. But ATT Wireless is booming.

Dec 04, 08 - 09:28 pm Comment from: from Ashland, Ky

I work close to an AT&T;Wireless call center (it was formerly a Cingular call center), and their "We're hiring" sign was still out...

Dec 05, 08 - 01:08 am Comment from: Tommy Boy

Hey AT&T how about some 3G coverage in Maricopa County someplace other than at the Convention Center/D-Backs Stadium? How about closing the gaps in coverage along U.S. 60?

Dec 05, 08 - 09:11 am Comment from: Peruchito

i thought they had record numbers in the past fwe quarters??

Dec 05, 08 - 12:31 pm Comment from: Hugh Jass

Gee, how about AT&T;being able to keep up a call in densely populated northern NJ?

Thee guys are so incompetent, they can't even keep calls up on major interstates leading to the Holland Tunnel... truly pathetic!

If they spend any less on infrastructure, they'll fall even further in the JD Powers & Consumer Reports wireless network quality studies... then again, I guess there's not too far to fall when you're already DEAD LAST or SECOND to DEAD LAST in EVERY region of the country for wireless network quality...

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