Sprint Nextel expects to save $1.2 billion a year by laying off about 8,000 employees by the end of the first quarter. The job cuts will cost Sprint $300 million. Sprint stressed that it will cut less deeply in its customer-service department. An analyst suggested Sprint might be the next wireless carrier to be acquired.
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 Sprint Nextel on Monday announced plans to lay off about 8,000 employees by the end of the first quarter. The move is expected to reduce labor costs $1.2 billion a year.The job cuts span all levels of the company in various geographic locations and include about 800 positions Sprint expects to be eliminated under a voluntary separation plan launched late last year. The cuts come at a short-term cost as Sprint said it expects to spend $300 million in the first quarter for severance and related costs.”Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment,” said Sprint CEO Dan Hesse. “We continue to improve the customer experience, and these improvements are reflected in much higher levels of satisfaction in customer surveys and in independent performance tests. Our commitment to quality will not change.”Staying Competitive in a Recession Sprint stressed that it is committed to maintaining high standards of customer service, so cuts in its customer-care department will be fewer than in other areas. Sprint serves about 51 million customers.However, the remaining employees will see fewer benefits. Following the lead of other companies, Sprint’s cost reductions suspend the 401(k) match for 2009, extend a 2008 suspension of salary increases through 2009, and suspend its tuition-reimbursement program for 2009.Sprint said its job cuts are part of a move to breed a more competitive cost structure and remain financially secure in a “challenging economic environment.” Positioned for the Storm Sprint’s near-immediate layoffs are a preface to the company’s fourth-quarter earnings release on Feb. 19. Other technology companies have made similar moves, either just before or just after their earnings announcements, including Microsoft and Intel .”Sprint has seen a lot of churn,” said Mike Disabato, a senior analyst at the Burton Group. “AT&T; took a lot of customers away from Sprint with the iPhone. I have a feeling Sprint is going to be the next to be acquired in this space.”Disabato isn’t sure what carrier might be willing to acquire Sprint. The company, he said, hasn’t made the kind of decisions that make it attractive. While Verizon shifted gears from LTE to 3G , for example, Sprint bet on WiMAX. The result for Google and Intel was poor as both companies wrote off hundreds of thousands of dollars they invested in the technology.On a brighter note, Sprint said it repaid $2 billion in debt in the second half of 2008 and renegotiated its credit terms with the expectation of sufficient liquidity to pay debt coming due during the next two years. At the end of the third quarter, the company had a cash balance of $4.1 billion and said it expected to continue to generate free cash flow in the fourth quarter. |
g to subscribers. Each program could be multi-gigabyte, which would be nearly impossible to serve to all BBC subscribers from a central location, Parker says.
