Thursday, November 14, 2002
Sprint the No. 3 U.S. long-distance telephone company, said it will cut 1,600 jobs and 500 contractors from the payroll of its PCS PCS.N wireless unit to trim costs.
Sprint said the 1,600 full-time job cuts will be completed within the next few months at Sprint locations across the country. They will represent about 6 percent of the PCS division's work force.
Guzman & Co. analyst Patrick Comack said it was a good first step, but doesn't address the PCS unit's core problem of customer turnover, or "churn."
"This is good, but this doesn't tackle the big issues really haunting Sprint right now," said Comack, who rates both stocks "perform in line," which is equal to a neutral rating. "Sprint's real problems are its churn rate, its network quality, its customer service."
Comack does not own either stock. Guzman does have a banking relationship with Sprint.
The severance costs associated with the job cuts are expected to result in a pretax charge of about $31 million in the fourth quarter, Sprint said. When fully implemented, the cuts are expected to result in annualized savings of about $170 million.
"With these moves, PCS is reducing layers of management to speed decision making," PCS President Len Lauer said in a statement. Lauer moved over from Sprint's long-distance operations recently to lead PCS.
He said only a small number of jobs being eliminated deal with customers directly. Most are in support functions such as marketing, information technology, network and finance.
By: DocMemory
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