Posted on 09/26/2002 4:36:00 PM PDT by RCW2001
By Jessica Hall
PHILADELPHIA (Reuters) - Local telephone company SBC Communications Inc. said on Thursday it will cut 11,000 jobs, or about 6 percent of its work force, and slash capital spending to offset pressures from the weak economy, competition and regulations.
About 9,000 of the 11,000 job cuts will occur in the fourth quarter, with the balance occurring primarily in early 2003. These new cuts are in addition to the 10,000 jobs SBC has eliminated year-to-date through August, the San Antonio, Texas-based company said.
Local telephone companies have been slammed by the weak economy and a shift to wireless telephones and electronic mail, which has reduced the number of telephone access lines in service.
SBC, the No. 2 U.S. local telephone company said it expects about one-third of the reductions will come from management employees and the remaining from non-management positions across the 13 states served by SBC.
The company expects to take related accounting charges in both the third and fourth quarters, but it declined to elaborate on the size of the expected charges.
SBC, the dominant local telephone company in the U.S. Midwest and Southwest, also said it would slash its capital spending budget for 2003 to about $5 billion to $6 billion. That compares with its 2002 capital spending budget of slightly less than $8 billion.
Shares of SBC closed at $21.90, down 69 cents, or 3 percent on the New York Stock Exchange ( news - web sites). In after-hours trade, they fell further to $21.20. The stock has fallen about 44 percent so far this year, underperforming the Standard & Poor's 500 Index by about 22 percent.
BABY BELLS AND RIVALS BATTLE OVER REGULATIONS
SBC and the other Baby Bells created by the 1984 breakup of AT&T Corp. contend they face burdensome regulatory pressures since they must give competitors access to their telephone networks at reduced costs.
"Instead of subsidizing prices for average consumers, we now subsidize competitors who in turn siphon revenues out of the market," SBC Chairman Edward Whitacre said in a statement.
Wholesale prices for network components set by state regulators are below cost, and in some cases up to 60 percent below retail rates, SBC said. Rivals then use the discounted network access to target lucrative business customers and high-end residential customers, leaving SBC to serve basic residential users, the company said.
The Baby Bells are required to open their local telephone markets to rivals before being allowed to provide long-distance telephone service to customers in their home regions.
SBC has lost nearly 3 million retail access lines year-to-date through August. Still, it earned $1.8 billion on revenues of $13.1 billion in the second quarter.
Smaller local phone companies, and long-distance carriers trying to enter the local market, however, argue that the Baby Bells have stalled, and put up road blocks to make it difficult for rivals to compete and challenge the Bells' near-monopoly status.
"Instead of blaming competition and regulation for their purported financial woes, SBC should look at its own business failures," said AT&T spokeswoman Claudia Jones.
"It's paid an astonishing $1 billion in announced penalties and overcharges since the passage of the Telecom Act, and has a dismal record of gaining long distance approval in the Ameritech region," Jones said.
SBC Ameritech is a regional affiliate of SBC Communications.
In May, SBC said it would pay $3.6 million to end two probes into inaccurate information provided to the Federal Commission on some long-distance applications.
Last week, SBC filed for permission to offer long-distance telephone and data services in California, a more than $10 billion market.
Just remember they can (economically) kill you, but they can't eat you. Worse comes to worse, you'll survive. It won't be fun, but you'll survive.
However, there are many Super-capitalists in this forum who would just tell you that the market has spoken and you lose. I think things like this could be avoided if the top people in the corp. wouldn't skim so much off the top. Good luck and God be with you.
Now my complaint.....We've had fiber optic cable, and a switching station 700 feet from our home for over a year and a half, and there is still no broadband available. Even more ridiculous, I had ISDN lines installed, but SBC offers no ISDN service since Prodigy took over.
Thanks for listening...I feel better now
Of course, foreigners are less expensive. Too bad you can't vote the CEOs of corporations into their positions, but, hey, this is a free-market society and the bottom line rules.
As for your problems obtaining broadband, is there a regulatory environment that has made it less attractive for SBC to offer DSL? In Wisconsin, we have it almost everywhere, but Illinois PUC wanted us to give physical access to our remotes to competitors. Rather than allow that, they just didn't offer the service.
WRONG ATTITUDE!!! Been there, done that, several times. DON'T WAIT for the pink slip. Start looking for another job NOW! Cell phone providers took away revenue? Then look at the cellular industry for a job. Start up LECs taking revenue? Then look for a job there. If you see the sh!t coming toward the fan don't just stand there an hope the you won't get spattered.
Have you seen the stock prices of the cellular companies lately? I work for one and layoffs are coming here, too.
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