SBC reports loss, will pare 5,000 jobs

1st-quarter sales down 6% at local-phone company

May 15, 2002|By BLOOMBERG NEWS

SAN ANTONIO - SBC Communications Inc. will eliminate 5,000 jobs, or 2.6 percent of the work force, this quarter after the second-largest U.S. local-telephone company posted its first loss in nearly five years.

Jobs will be cut in 13 states. Reductions include management and nonmanagement employees who don't directly serve customers, SBC said. The company pared 4,000 jobs in the first quarter and said last month that it would shed about 4,000 more through December.

SBC had a first-quarter loss of $81 million as sales fell 6 percent. The company said last month that meeting its forecast of at least a 1 percent revenue increase this year will be "challenging" as corporate customers spend less.

Phone service companies and equipment makers such as Lucent Technologies Inc. have announced plans to shed more than 120,000 workers this year.

Shares of San Antonio-based SBC rose 99 cents yesterday to close at $33.04. They are down from a high of $59.94 in January 1999.

The job cuts could save SBC $375 million annually, based on an estimate from some analysts that firing one worker reduces a phone company's expenses by $75,000 a year. The company had sales of $10.5 billion in the first quarter, excluding a wireless venture.

Challenger, Gray & Christmas Inc., a job placement company, said communications companies announced plans to cut 120,698 jobs in the first four months of this year, 31 percent more than in the corresponding period last year.

Investors have said thousands more industry jobs are likely to be eliminated to bring expenses into line with decreased spending by customers on calls, other services and equipment.

Phone companies are also slashing network investment to cope with waning demand. SBC said last month that it would reduce capital spending.

The company had planned to spend as much as $9.7 billion this year. Last year, it spent $11.2 billion.

Jobs will be eliminated in Arkansas, California, Connecticut, Illinois, Indiana, Kansas, Michigan, Missouri, Nevada, Ohio, Oklahoma, Texas and Wisconsin, SBC said.

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