Scott Moritz
Updated from Oct. 7
The ax is swinging again at AT&T (T Quote - Cramer on T - Stock Picks). The struggling telco said late Thursday it would slash its workforce and take a big asset writedown, confirming reports by TheStreet.com over the past week. AT&T's decision represents its latest effort to revive its flagging fortunes as the telecom industry grows ever more cutthroat. In premarket action Friday, AT&T rose 38 cents to $15.42. The stock is down more than 25% this year, having touched an all-time low in August. The Bedminster, N.J., company said late Thursday it would cut 20% of its staff during 2004 in an effort to reduce costs. That move, which will result in the firing this year of some 12,000 workers, will be accompanied by a $1.1 billion restructuring charge. AT&T said some three-quarters of affected workers have already been told or have departed. The company earlier this year said it aimed to reduce employment by 8% over the course of 2004. AT&T ended 2003 with some 60,000 workers. AT&T also said Thursday it would write down the value of its balance sheet by a staggering $11.4 billion. The company said the move reflects continued industry pricing pressure and a move to new technologies. "In response to recent regulatory developments and a highly competitive market, we have made some tough decisions to reduce our workforce and cut costs," said CEO Dave Dorman. "Ongoing investments in our network and systems around the world have allowed us to significantly improve customer-service metrics while driving industry-leading productivity." TheStreet.com reported last week that the company would slash as many as 15,000 jobs in a restructuring widely awaited on Wall Street. The anticipation only grew after Dorman canceled an appearance at a Goldman Sachs communications conference. Given the numerous pitfalls AT&T has stumbled into this year, some industry analysts and investors had speculated that Dorman's job wasn't secure. But AT&T representatives have adamantly insisted that Dorman isn't leaving, and the executive's comments in Thursday's press release indicate he remains in control for now.
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