ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, January 3, 1996 TAG: 9601030067
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Bloomberg Business News
AT&T Corp. raised eyebrows Tuesday with plans to slash 40,000 jobs. Analysts say tens of thousands of firings in the phone industry are still to come.
``There are going to be some painful times ahead,'' said Jeff Christian, chief executive of Christian & Timbers Inc., a management consulting firm. ``Over the next three years, we'll probably see 100,000'' telephone jobs cut.
Managers will be hardest hit. ``They want to get rid of the 50-year-old middle manager,'' Christian said. He cited executives in human resources, sales and finance as most vulnerable.
In addition, advances in technology mean computers and software - not people - run the networks that carry phone calls. The network at AT&T, for example, handles about 190 million calls a day automatically.
``There are few, if any, of those calls that require manual intervention,'' said Dave Johnson, spokesman at AT&T's network operations center in Bedminster, N.J. Even when a fiber-optic line is cut, the phone network can automatically reroute calls.
Only one in four of the workers affected by Tuesday's action are likely to leave voluntarily. The rest, about 30,000, will be laid off with severance pay.
The decision, reached by senior executives last weekend after a buyout offer to managers expired, will save money and sharpen the direction of the three companies to be formed when AT&T breaks up later this year: a telecommunications service firm, a phone equipment manufacturer and a computer manufacturer.
It is AT&T's largest single job cut and coincides with an 8,500-job reduction in its computer manufacturing unit. About 60 percent of the new cuts will be in white-collar posts.
AT&T will take a $4 billion after-tax charge against its fourth-quarter earnings to pay for the latest cuts, office closings and other changes.
The number of AT&T employees will shrink 16 percent, from approximately 300,000 to 252,500.
Investors, meanwhile, are urging phone companies to boost their share price.
``There is enormous pressure from Wall Street to cut costs,'' said Hersh Cohen, who manages the Smith Barney Appreciation Fund, which owns 1.4 million AT&T shares. ``It's become almost a fever.''
Investors win when companies announce job cuts. AT&T's decision to slash its work force lifted the stock by $2.621/2 to $67.371/2 a share. Based on the 1.59 billion shares outstanding, those job cuts added more than $4 billion to AT&T's market value.
``It's not just money-losing companies that are cutting costs,'' Cohen said. ``It's very profitable companies.''
AT&T posted $4.7 billion in earnings in 1994.
MCI Communications Corp., the No.2 U.S. long-distance company, said in August it would fire 3,000 workers, 7.1 percent of its work force. Its stock rose by 2.7 percent that day.
Sprint Corp., the No.3 carrier, said it will cut 1,600 jobs over the next two years.
The Baby Bell local phone companies also are firing workers. The Bells have an average of 32 employees per 10,000 phone lines, down from 35 at the end of 1994, analysts said.
The seven Baby Bells are Nynex Corp., Pacific Telesis Group, US West Inc., BellSouth Corp., Bell Atlantic Corp., SBC Communications Inc., and Ameritech Corp.
With fewer telephone workers and automated networks, unions suffer.
``If there are work stoppages in the future, it will have almost an undetectable effect on networks and customers'' because of automation, said Ken McGee, analyst at Gartner Group, a Stamford, Conn.-based consulting firm. ``The power of the unions is eroding and will continue to erode.''
The Communications Workers of America, which represents 380,000 phone workers, has 120,000 fewer members at the seven Bells and AT&T than when AT&T split up in 1984.
CWA blasted AT&T's job slashing.
``This is yet another case of the kind of mindless job destruction that has terrorized working Americans as corporate executives play to Wall Street and manipulate their stock prices,'' said Morton Bahr, CWA president.
The CWA has 80,000 members at AT&T. It said AT&T hasn't told the union how many members will be fired.
Dave Golden, a manager in the company's government affairs office in Basking Ridge, N.J., said AT&T's action was more evidence that lifetime employment in a corporation is a thing of the past.
``People come in now with the expectation that this will not be career employment,'' Golden said during lunch with colleagues. ``I think most people at this table came in with the opposite expectation.''
The company contends the job cuts are necessary because of changes in the communications industry.
``We intend to launch these companies with the appropriate size, structure, assets and capitalization to be leaders, recognizing they will be operating in industries with dramatically changing competitive environments,'' said Richard Miller, AT&T's chief financial officer.
For instance, the telecommunications service company will continue to consolidate operator service centers. The network equipment company will combine some international sales offices. And throughout AT&T, new computer systems will be used to automate some jobs.
Some parts of the phone industry will add jobs, such as in the wireless industry, which is adding almost 30,000 new customers a day. Repair people, software experts and marketers are likely to be in demand.
Still, the outlook is gloomy for many telecommunications workers.
``You always feel for the people'' said Cohen, the money manager. ``But the [phone companies] are all doing it. It becomes `The American Way.'''
The Associated Press contributed to this story.
LENGTH: Long : 110 lines ILLUSTRATION: PHOTO: AP. 1. Most of its layoffs, about 60 percent, AT&Tby CNBannounced Tuesday, will be of white-collar employees. color. 2.
Roberta Zardecki, a 12-year veteran with AT&T, thinks the layoffs
will mean heavier workloads for those who remain. Chart by AP.