BellSouth Corp, the biggest local-telephone company in nine southeastern US states, will eliminate 4,000 to 5,000 jobs after sales fell.
The company said in a statement that it will have expenses of US$250 million to US$300 million to cut as much as 5.8 percent of its staff, including management positions. Most of the reductions are expected to come from voluntary departures, spokesman Jeff Battcher said. The company's payroll was 85,742 in March, down about 2,000 from year's end.
BellSouth's first-quarter sales fell 1.1 percent, including results of a wireless joint venture. BellSouth Chief Executive Duane Ackerman and rivals such as SBC Communications Inc are slashing capital spending and operating costs as demand from business and residential customers falls. The companies were hoping for a rebound in the second half, one analyst said.
"Even if we do see a recovery, the slope of that recovery is going to be extremely shallow," said Michael Bowen, a SoundView Technology Group Inc analyst who has a "buy" rating on the shares and doesn't own them personally. "They're probably building a safety net," said Bowen, who expects the bulk of the expenses to be booked this quarter.
Shares of Atlanta-based BellSouth fell US$0.31 to US$33.19.
They have fallen 20 percent in the past year. The company sells its services from Florida to Kentucky.
Including BellSouth's 40 percent stake in Cingular Wireless, the second-biggest US mobile-phone operator, first-quarter sales were US$7.08 billion.
Job-placement firm Challenger, Gray & Christmas Inc. has said communications companies announced plans to shed 120,698 jobs in the first four months of 2002, 31 percent more than in the same period last year. Investors have said thousands more jobs in the industry likely will be cut to bring costs in line with lower spending on calls, other services and equipment.
When BellSouth reported first-quarter results in April, the company lowered its 2002 sales growth forecast to 1 percent from as much as 4 percent, the second reduction in as many months.
The company also trimmed its estimate for capital spending, excluding Cingular, to US$4.2 billion to US$4.4 billion, from a previous estimate of as much as US$5 billion. Last year, as it eliminated 4,200 jobs, BellSouth spent US$6 billion.
Local-phone lines served by BellSouth, the third-biggest US local-phone provider, fell 1.8 percent to 25.4 million in the year ended in March.
The latest job cuts may save BellSouth US$375 million annually, based on an estimate from some analysts that firing one worker reduces a phone company's expenses by US$75,000 a year.
SBC, BellSouth's partner in Cingular, on Tuesday announced that it was eliminating 5,000 jobs this quarter after reporting its first loss in almost five years in the first period.
BellSouth today cited heightened competition and "regulatory pricing pressures" for the cutbacks. On Monday, the Supreme Court rejected a bid by the big US regional phone providers to raise prices for the lines and switches they must lease to rivals.
New York-based Verizon Communications Inc is the biggest US local-phone company.
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