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AT&T plans to eliminate 5,000 jobs this year

AT&T Corp, the largest US long-distance telephone company, had US$1 billion in pretax costs last quarter mainly for job cuts and will eliminate 5,000 positions this year as sales shrink.

The latest cuts, which are in addition to 5,100 last year, affect 6 percent of the phone-business workforce. Jobs are being shed at the business and consumer phone units and the corporate level, AT&T said, with managers accounting for more than half.

Chief Executive Officer C. Michael Armstrong, who last month agreed to sell AT&T's cable business to Comcast Corp for US$72 billion, is facing lower prices and more competition in long-distance. Sales at AT&T Business fell 4.7 percent in the third quarter, and were forecast to fall by more last quarter. AT&T has said consumer sales may fall 30 percent this year.

"AT&T is clearly in conservation mode, just like the rest of the industry," said Richard Klugman, a telecommunications analyst at Jefferies Group Inc who has a "hold" rating on AT&T shares and doesn't own the stock. "The long-distance business is slowing and they need to shrink their costs as their revenue shrinks."

Sales at the company's consumer long-distance business fell 18 percent to US$3.8 billion in the third quarter. AT&T and other long-distance sellers are losing customers to local-phone carriers such as Verizon Communications Inc. entering the market. They are also being hurt by competition from wireless calls and e-mail.

Shares of New York-based AT&T fell US$0.27, or 1.5 percent, to US$18.37. They have risen 13 percent in the past year after plunging 66 percent in 2000.

AT&T has 80,000 employees in its phone operation. The company's cable business has 40,000 workers after cutting 13,000 jobs last year.
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