Sprint cuts 8,000 jobs, 15% of its workforce

Sprint Nextel announced 8,000 job cuts Monday and other cost-saving measures that CEO Dan Hesse told employees in an internal memo kept the company from having to cut 3,000 additional jobs.

Hesse was not available for comment but a copy of the memo was provided to USA TODAY.

Sprint's decision to cut 15% of its workforce is the latest in a series of moves aimed at turning around the ailing wireless carrier. Sprint (S) has been losing customers by the thousands, and the bleeding continues. The cuts will save $1.2 billion annually, the company says.

Drawing a bead on downsizings at other big companies, including AT&T, Motorola and Microsoft, Hesse said it was critical for Sprint to also make reductions "to ensure our company has the financial resources to weather this economic storm."

A former AT&T executive, Hesse became Sprint CEO in late 2007. Since then, he's been slashing costs, improving customer service and introducing products to woo customers. Roger Entner, chief of telecom research at Nielsen, says the cuts suggest that Sprint's problems are far from over. "The supertanker known as Sprint is taking on more water."

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Despite major improvements of Sprint's two cellphone networks, many consumers still regard Sprint's service as substandard. Changing that perception will be tough, Entner says. "It takes about a year of positive buzz to turn things around."

"The earliest they could turn the corner would be the end of this year," he predicts.

Rumors of a Sprint acquisition have been swirling for months, in part because the shares are so cheap. They closed at $2.49 Monday. Jane Zweig, CEO of The Shosteck Group, a market analysis group that tracks wireless, doesn't think that's likely. "Who'd want them?"

Entner says the economic downturn is probably the biggest deterrent to a Sprint acquisition. "Nobody can get the credit to buy them," he says. "If this was 2007," when merger money was flowing, "somebody would have bought them by now."

As part of its cost cutting, Sprint will freeze salaries and suspend matching contributions for its 401(k) — actions that saved the company from 3,000 more job cuts. The pay freeze also applies to Hesse, says Sprint spokeswoman Leigh Horner.

Hesse and other employees may still be eligible for end-of-year bonuses. Bonus payout "depends on whether they met their (financial) objectives" for the year, Horner says.

Sprint lost more than 1 million subscribers in the third quarter and is expected to lose as many in the fourth quarter. Results for the fourth quarter are scheduled to be released on Feb. 19.

Source : USAToday
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]