Update: Qwest to Cut 11,000 Jobs - TheStreet

Update: Qwest to Cut 11,000 Jobs

Qwest also said it will sell $1 billion of investments in about 15 companies and hiked its revenue estimates.
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Updated from 12:54 p.m. EDT

Telecommunications giant

Qwest Communications

(Q)

said Thursday that it would eliminate 11,000 jobs within the next 15 months as part of a major realignment that follows its recent merger with

US West

.

The Denver-based company, seeking to streamline its businesses, said it intends to cut 4,500 jobs by the end of 2000 and another 6,500 positions by the close of 2001, about 15% of its total workforce. In addition, 1,800 contractor jobs will be eliminated, the company said.

Qwest finished Thursday regular trading down $2.75, or 5%, at $48.75.

Qwest is "blending the businesses and cultures to further Qwest's position as an entrepreneurial, large-cap growth company," said Joseph Nacchio, Qwest chairman and chief executive, in a statement. "We are relentlessly pursuing growth and uncovering new areas of customer demand."

The extent of the job cuts is greater than previously expected. In early August, Nacchio had said between 2,000 and 4,000 positions -- mainly in the finance, legal and communications departments -- would be

eliminated by the end of 2000.

The large number of cuts, though, failed to surprise one analyst. "The layoffs don't scare me," said James Linnehan of

Thomas Weisel Partners

. The firm has not done any underwriting for Qwest.

"If you can find that many people to lay off, then they probably need to be laid off," added Linnehan, who rates Qwest stock a strong buy, "And I applaud them for that."

At the same time, Qwest said it has introduced a new compensation plan for remaining employees, linking pay to company performance. Benefits include stock options, quarterly bonuses and a stock purchase plan that enables workers to purchase Qwest stock at a 15% discount.

Qwest also announced that it would sell $1 billion of investments in about 15 companies, including a portion of a

Global Crossing

(GBLX)

stake obtained through the acquisition of US West.

The deal with the regional telephone carrier, which was completed in June, more than doubled Qwest's size.

Qwest, meanwhile, raised its revenue estimates for 2000 and 2001. Revenue now is expected to reach between $18.8 billion and $19.1 billion, up from a target of $18.5 billion, Qwest said. In 2001, Qwest anticipates revenue between $21.3 billion to $21.7 billion, up from a goal of $21 billion.