Just months after AT&T Corp. stated it would split into three separate companies, Chairman Robert Allen announced 40,000 people will be displaced or laid off during the next three years. Meanwhile, AT&T Wireless Services is actively recruiting.
Experts say downsizing is necessary for AT&T to compete in an intensely deregulated environment with an ever-increasing number of competitors. In the new AT&T, about 17,000 jobs will be lost, with 110,000 workers remaining. Once 23,000 jobs are eliminated in the systems and technology company, about 108,000 employees will remain there.
Within the new AT&T, reductions will occur in corporate staff organizations, among operations and support staff-as a result of “continued application of technology”-and in the areas of marketing and sales, said AT&T.
So where do cellular, paging and personal communications services fit in?
AT&T Wireless Services, part of the new AT&T, is busy hiring. “There’s not a lot of fat to trim here,” commented Bob Ratliffe, senior vice president of corporate communications for AT&T Wireless Services. He said the division’s Kirkland, Wash., headquarters will add 200 to 400 people to its existing staff of 600 during the next two years. Recruiting also is taking place in regional offices throughout the United States.
This is “one of the fastest growing parts of the company,” commented Mark Lowenstein, director wireless/mobile communications at Cambridge, Mass.-based Yankee Group. “AT&T inherited a different beast when it acquired McCaw [Cellular Communications Inc.],” he explained, which was lean from the start. “It’s been a bit of a lesson for AT&T,” Lowenstein added, pointing out McCaw was a $1 billion to $2 billion company with a small corporate structure and decentralized management when AT&T bought it.
Positions sought within AT&T Wireless Services include radio frequency, design, switch and network engineers for broadband and narrowband PCS. Site acquisition specialists, cell site technicians, project managers and marketing professionals also are in demand.
Telecommunications analyst Francis McInerney of New York-based North River Ventures Inc. is not so upbeat about AT&T’s recent changes. A decade of lag in its long-distance business and a course of fruitless acquisitions-NCR Corp., AT&T Canada and others-have afflicted AT&T’s long-time good fortune, which the split and subsequent layoff plans aim to leverage, McInerney said.
McInerney, formerly of Northern Business Information, questions what gain AT&T will realize from its McCaw purchase. “They bought in when PCS is about to drive the price-per-minute [of telecommunications] through the floor.”
Even once cutbacks and thinning measures are completed, McInerney remains leery of the company’s future. Online services have supplanted traditional voice and fax communications conducted over the phone. And the price difference is phenomenal. Transmitting a 42-page document on a fax machine from New York to Tokyo costs about $28, said McInerney. On the Internet it is 1.4 cents.
“AT&T is entering a troubled period,” said McInerney. “The entire price structure of the industry just went south.”
Corporate spokeswoman Eileen Connolly said AT&T views opportunity in wireless and local service areas, from both market and employment vantage points.
In the yet to be named systems and technology company, layoffs will focus on back-office support in engineering and installations offices around the world and in U.S.-based support for international operations. AT&T Network Systems, which produces base stations and switches for wireless networks, will terminate some product and market management positions and centralized support in manufacturing operations. Offices of Network Systems and Global Business Communications Systems outside the United States will be consolidated, said AT&T.
About 70 percent of company-wide layoffs, accounting for 28,000 people, are expected this year. AT&T said about 6,500 managers have taken a voluntary severance package and about 4,000 employees will take jobs in other areas of the company. About 10,000 jobs to be eliminated include corporate-wide positions in information systems, human resources and financial operations.
Any optimism for displaced employees?
Lowenstein said many telecommunications companies, specifically PCS players, are understaffed and offer job opportunities. “Lots of resumes will be coming in from New Jersey,” stated Lowenstein, to heavy-hitter PCS companies like Sprint Telecommunications Venture and PCS PrimeCo L.P.
Manufacturers Ericsson Inc., Nokia Corp. and Northern Telecom Ltd. are recruiting engineers and people for other network infrastructure-related positions, said Lowenstein.
Lowenstein also said he expects AT&T will rehire in different areas a number of those laid off, though growing sectors of the company, including wireless, are likely to hire younger people who, with less experience have lower salary requirements.
Global Information Solutions, spawned from NCR, is AT&T’s computer division and third company. Starting last fall and continuing through this year, 8,500 jobs will be eliminated in GIS. AT&T said it already paid a post-tax charge of $1.17 billion to third quarter earnings for this and other actions to strengthen the company.
AT&T will take a post-tax charge of about $4 billion, or $2.50 per share, against fourth-quarter earnings to finance the restructuring. This equals $6 billion before taxes and primarily will affect the new AT&T, focusing on telecommunications services. Earnings for the first nine months of 1995 totalled $2.8 billion, or $1.77 per share, compared with 1994 year-end earnings of $4.7 billion, or $3.01 per share.
