AT&T Cutting More Jobs

As revenue shrinks at the big telcos, so does employment.

That fact of life was drilled home once again Thursday when AT&T (T Quote - Cramer on T - Stock Picks) CEO Dave Dorman addressed investors at a conference in New York. The executive said the big phone company's cost-cutting efforts now target about 12% of the workforce, up from 10% just two months ago.

The change means some 1,400 more employees will see their jobs fall to the ax by year-end. AT&T, which started the year with 71,000 workers, slipped 26 cents Thursday to $19.62.

A company representative said the reductions are part of an ongoing "management streamlining and automation" effort. But observers note that AT&T has been seeing unexpected weakness in its sales to businesses. Those shortfalls have led to a string of recent executive-suite shake-ups.

Just last week, business services chief Betsy Bernard was suddenly replaced by Bill Hannigan, former chief of travel information management service Sabre (TSG Quote - Cramer on TSG - Stock Picks).

Revenue erosion has become an all too common theme across the industry in recent years, as the economy cooled down and competition heated up. The conventional phone companies in particular have seen their businesses sink as more people use cell phones for calling.

On Tuesday, local phone giant SBC (SBC Quote - Cramer on SBC - Stock Picks) said between 3,000 and 4,000 employees would get pink slips this quarter as part of an ongoing cost-cutting effort. Also on Tuesday, Verizon (VZ Quote - Cramer on VZ - Stock Picks), the nation's largest phone company, said it would take a $2.8 billion charge to cover the buyout of 21,260 employees this quarter.