Finger-Pointing SBC Cuts Jobs, Spending

Blaming onerous federal pricing rules, SBC (SBC) set plans to slash spending and cut 11,000 more jobs.

The nation's second-largest local phone company said Thursday it will reduce capital spending by a quarter to about $5.5 billion next year, roughly $2 billion less than its projected 2002 outlay. The additional cuts further degrade a bleak downturn for equipment suppliers such as Lucent (LU) and Nortel (NT), which are already reeling from steep sales declines. TheStreet.com examined the telecom-spending outlook earlier Thursday.

SBC says the 11,000 job cuts come on top of the 10,000 firings the Baby Bell has already done this year. All total, SBC looks to be cutting more than 10% of its 192,000-worker staff by early next year. Ahead of the postclose news release, SBC stock dropped 69 cents to $21.90, putting it near a 52-week low.

Going Down Swinging

In an effort to make the financial political, SBC CEO Ed Whitacre took aim at federal regulators who are forcing the dominant local telco to sell access to their networks at discounted prices. He contends that under the pricing rules SBC is selling some services for less than cost.

"When unrealistic and outmoded regulation results in our having to lay off highly trained workers and constrains our investment in our networks, it is a disservice to all local phone users in the states we serve," Whitacre said.

The Bells have resisted many of the dictates of the Telecommunications Act of 1996, which required local monopolies to open their markets to competitors in exchange for approval to sell long-distance service.

Early on, the deregulation efforts helped spawn hundreds of telcos small and large that aimed to take a piece of the local Bells' pie. The Bells