Sprint Cutting More Jobs

The company will write down the value of its balance sheet as well.
Author:
Publish date:

The phone-service price war has

Sprint

(FON)

swinging the ax again.

The Overland Park, Kan., telco said Friday that it will cut an additional 700 jobs in its business services unit. The cuts come on top of the

1,100 employees the company said it was letting go in June.

Sprint had 64,500 employees as of June.

Sprint blamed heavy competition, regulatory setbacks and shifting networking technology for its need to make a second round of job cuts in four months.

Sprint's latest cuts are similar to the staff reductions going on at embattled rivals

AT&T

(T) - Get Report

and

MCI

(MCIP)

. AT&T is

cutting 20% of its workforce, and sources familiar with the company say deeper reductions are in the works.

MCI has also been struggling with eroding revenue; sales are down 15% from year-ago levels. The No. 2 business-services player has already cut 13,300 jobs this year and says it expects to slash 2,700 more by the end of the year.

In a research note Friday, Lehman Brothers analyst Blake Bath writes that the recent cutting spree "indicates that trends in the enterprise long distance segment of telecom remain very challenging, with significant price declines.

Persistent cuts have become a seemingly permanent condition in telecom over the past three years, as the industry continues to suffer from an oversupply of capacity and service providers. Shifting technology trends have also undercut the old-line players as voice-over-the-Internet and wireless calling gain popularity.

Sprint says it plans to take a network asset writedown related to the shrinking value of its operation when it reports third-quarter earnings Tuesday. The company didn't indicate how big its writedown would be. Otherwise, Sprint expects to report adjusted profit that exceeds the 21 cents analysts are looking for.

"The marketplace has changed dramatically, and it is important that we seize the opportunities that our unique portfolio of wireless and wireline assets allows us to offer," business services chief Howard Janzen said in a press release.

Early Friday, the stock rose 19 cents to $20.49.