Ameritech Corp. said it will cut about 5,000 jobs, or 7 percent of its work force, from its cellular and security operations this year in a $3 billion cost-containment program.
Jerrell Ross, a spokesman for the company, said the restructuring includes optimizing its cellular distribution channels, which will include less reliance on company-owned stores and more reliance on resellers and major retailers. Due to competitive reasons, said Ross, Ameritech would not detail how and where the job cuts will be made.
In its first-quarter earnings statement released last week, the company said it recorded a one-time after-tax charge of $64 million related to the restructuring costs. That charge, coupled with a separate accounting charge of $34 million related to the company’s investment in Tele Danmark, reduced the company’s net income by about 8 percent.
Net income for the quarter was $492 million, or 44 cents per share (diluted), compared with net income of $536 million, or 48 cents per share (diluted), for the first quarter of 1997. Excluding one-time charges, Ameritech said it would have reported net income of $590 million.
Ameritech experienced slower growth in its cellular operations, adding 15 percent fewer subscribers during this year’s first quarter than the same quarter last year.
Despite the decreased earnings, Ameritech said its first-quarter revenues increased 7.1 percent to $4.13 billion, compared with revenues of $3.86 billion during the first quarter of last year. The company attributed the increase to strong volume and customer gains in its U.S. operations and expanded contributions from its European investments.
Ameritech this month completed the sale of its 24.95-percent stake in Telecom Corp. of New Zealand Ltd. through a global offering. (See related story on this page).
Ameritech said its investments in international businesses contributed more than 25 percent of its earnings growth in the quarter. With a portfolio valued at $7.5 billion, and strategic investments in Belgium, Denmark and Hungary, Ameritech is the largest foreign investor in European telecommunications, the company said.
