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| Telecom giant AT&T said it would cut its
workforce by 20 percent in 2004 due to weak business conditions and
take an 11.4 billion dollar writedown to reflect the lower value of
its assets.(AT&T) |
AT&T Corp. will cut another 7,400 jobs and reduce the value of its
assets by $11.4 billion, spurred by its retreat from traditional consumer
telephone services, the company said on Thursday.
The company said the new job cuts, which raises its total cuts to 20
percent of its work force this year, and other cost measures would boost
operating profits in the second half of the year.
The moves are part of efforts by the third-largest U.S. telephone
company to shift its focus to business services and cut costs amid a price
war for long-distance telephone services and increasing competition from
the dominant U.S. local telephone companies.
"We expect to see some real effect of the headcount and other reductions on
the profit of the business in the second half of this year," AT&T
Chief Financial Officer Thomas Horton told Reuters. "This has been hard
work, but it is bearing fruit on the cost structure of the company."
The announcement, much anticipated by analysts, sent AT&T's shares
up slightly in after-hours trading.
AT&T said while the job cuts will trigger a $1.1 billion charge to
third-quarter earnings, the asset write-down will reduce depreciation
costs by $1 billion for the remainder of the year.
The write-down in the value of assets will be taken as a charge against
earnings, the company said.
AT&T had said it would be forced to cut jobs and review the value
of its $43.8 billion asset base after it decided in July to retreat from
the traditional consumer telephone business due to unfavorable rulings
from federal regulators and courts.
The company, which had cut about 8 percent of its 61,600 workers by the
end of the second quarter, said the new cuts would bring the total
reduction to 20 percent of its work force. About three-fourth of the total
cuts have already been made, and Horton said the cuts had fallen
"disproportionately" on AT&T's consumer division.
(Agencies) | 
Updated: 2004-10-08 10:49