Bell cutbacks may involve layoffs

August 13, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

When Bell Atlantic Corp. announces details of its planned staff cutbacks Monday, employees hoping for a repeat of its 1992 job buyout offer are likely to be disappointed, a corporate executive said yesterday.

"I don't know that we've had any soft landings for a while," said Ken Pitt, the regional phone company's executive director of media relations. "We've publicly said we do not expect to have, going forward, any offers."

Mr. Pitt and other Bell Atlantic executives declined yesterday to reveal details of the company's plans for a new round of job eliminations until Monday, when the company will hold a morning press conference.

Bell Atlantic moved up its announcement by a day after The Sun published excerpts yesterday from an internal memo describing its plans to carry out "aggressive cost reductions" and a "sweeping accounting change."

The memo made clear that the reductions would include job eliminations. Like other Bell Atlantic spokesmen, Mr. Pitt would not officially confirm or deny the authenticity of the memo, but he signaled that Monday's announcement would involve layoffs rather than any gentler form of cutback.

"In recent years we have involuntarily shed people from the business . . .," he said. "That continues apace."

While the company's more than 11,000 employees in Maryland awaited news of their future, telecommunications industry analysts were describing the planned cutbacks as a logical response to the specter of competition in a traditionally monopolistic industry.

The analysts said the cuts would probably not have much effect on Bell Atlantic's burgeoning cellular telephone business or its ambitious video service plans.

But they said the news would likely come as a severe blow to longtime employees in the company's local operating companies, including the former Chesapeake & Potomac Telephone Co. of Maryland, now called Bell Atlantic-Maryland.

"You've got to be nervous in general if you work for a local telephone company," said Robert A. Waldman, a telecommunications analyst with Salomon Bros. in New York. He said he expects the telephone industry as a whole to shrink from about 500,000 employees now to about half that number in five years.

Bell Atlantic's three largest facilities in Maryland are its state headquarters on Pratt Street in downtown Baltimore, a data center in Hunt Valley and its Chesapeake Center in Silver Spring. The company has 4,700 employees in the metropolitan area, including 1,700 in Baltimore City and 1,400 in Baltimore County, and 3,800 in the Washington suburbs, according to spokesman Dave Pacholczyk.

Mark Roberts, who follows the telecommunications industry for Alex. Brown & Sons, said Bell Atlantic's cutbacks are necessary to prepare for an onslaught of competition in its core business of providing local telephone service.

"Competitors starting even late this year -- and next year certainly -- are going to start nipping away at their market share," he said.

That competition will be especially intense in Maryland, where the state Public Service Commission has granted MFS Communications Co. permission to offer local services to businesses and where Southwestern Bell Corp. is applying to offer residential phone service in Montgomery County.

Mr. Roberts said Bell Atlantic also must cut costs to improve its cash flow, which he said had fallen below the average for the regional Bell companies.

Mr. Waldman, the Salomon analyst, said the "sweeping accounting change" mentioned in the Bell Atlantic memo would almost certainly be a switch to a faster method of depreciating assets to reflect the pace of technological change. He praised the move as a more realistic appraisal of the company's assets.

"In the real world, things have changed, and the idea that a switch will last 20 years when it's two generations past it is not going to fly."

Mr. Waldman said the financial markets would likely react favorably to Bell Atlantic's upcoming move.

"The time to react is not when your competition is upon you or you've lost market share," he said. "The management here is very far-looking in its approach to this business and it senses the inevitability."

After the disclosure of the cost reduction plans yesterday, Bell Atlantic stock rose 62 1/2 cents to close at $57.625.

Bell Atlantic, with 73,600 employees, is the parent of the operating companies serving Maryland, Virginia, New Jersey, Delaware, Pennsylvania, West Virginia and the District of Columbia.

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