NEW YORK -- AT&T; Corp., its stock down 30 percent from a record in February, said yesterday that it has frozen hiring and intends to eliminate jobs under a plan to cut $2 billion in costs by 2001.
The largest U.S. long-distance phone company, which began the hiring freeze Aug. 19, has not determined how many jobs will be cut, spokeswoman Adele Ambrose said. It cut more than 20,000 jobs last year and reduced selling, general and administrative expenses by $1.6 billion. AT&T; has 149,000 employees.
Since joining AT&T; in November 1997, Chief Executive Officer C. Michael Armstrong has said the company must slash costs and invest in new businesses such as cable television. In April, when AT&T; announced that it would buy cable TV operator MediaOne Group Inc. in a transaction now valued at $51.3 billion, the company said it would cut $2 billion more in costs by 2001.
"This is what it takes to run a business," said Kevin Roe, an ABN Amro Inc. analyst who has an "outperform" rating on the shares. "You have to be flexible on the cost side."
Armstrong, reached at a meeting of the Congressional Advisory Commission on Electronic Commerce, declined to be specific about the size of the layoffs.
"I don't think this is something we're going to put a stake in the ground and say, 'This many people by this date,' " he said. "This is going to be an ongoing activity" through next year.
While AT&T; may slash jobs in slower-growing long-distance operations, it could add them in faster-growing areas such as Internet and wireless businesses, Ambrose said. It's already added workers in its AT&T; Broadband & Internet Services division, which includes the Tele-Communications Inc. cable systems acquired earlier this year.
AT&T; shares have dropped 30 percent from their record close of $63.3281 on Feb. 3, hurt by inves- tors' concerns that falling long-distance rates may erode revenue and profit. The shares yesterday were unchanged at $44.50.
Selling long-distance service has become less profitable as the standard rate for calls has been cut as low as 5 cents a minute from 10 cents, the rate that No. 3 U.S. long-distance company Sprint Corp. introduced in 1995.
Last month, AT&T; introduced its One Rate 7 Cents plan, which charges customers 7 cents a minute day or night for interstate phone calls. Customers on that plan get a $1-a-month discount off the normal $5.95 fee if AT&T; also provides their service for intrastate long-distance calls.
Rivals MCI WorldCom Inc. and Sprint offer nickel-a-minute long-distance plans that are good only during evenings and weekends. These also have monthly fees.
AT&T; said Aug. 30 that it expects to meet earnings estimates of $2.13 to $2.20 a share this year and $2.10 to $2.15 in 2000. In 1998, it earned $2.31 a share, excluding charges for the purchase of cable operator TCI.
Pub Date: 9/16/99