NEW YORK – Long-distance telephone company AT&T Corp., which plans to sell its cable television business to Comcast Corp., said on Friday it will take a $1 billion charge against its fourth-quarter earnings to cover the cost of cutting about 10,000 jobs through 2002.
The pretax restructuring charge, which had been expected, will pay for severance packages and other costs related to cutting jobs in administration, and in its business and consumer operations.
About 5,100 people — more than half of all affected employees — have already left the payroll, or have been individually notified. Another 5,000 employees are expected to leave the payroll in 2002, and have been told that their departments will be reduced in size, the company said.
AT&T had roughly 125,000 employees at the start of 2001. Including the expected cuts, the No. 1 U.S. long-distance telephone and cable television company will end 2002 with about 115,000 workers. However, the company could add workers — such as sales and support staff — if needed to handle fast-growing products such as data and Internet services.
New York-based AT&T said in October it would take a fourth-quarter charge as it cut costs, but it did not quantify the size of the charge at that time.
The company warned the soft economy and stiff competition would hurt results in core telephone operations through 2002, and revenues in both the consumer and business units would shrink next year.
Already hurting from price wars and competition from the Baby Bells, AT&T felt added pressure from the weak economy, sluggish business activity and low consumer confidence.
AT&T said these trends will continue through 2002, forcing it to cut expenses and investments in its business and consumer units. AT&T put its Basking Ridge, New Jersey office building on the market for sale or lease, and continued to cut jobs.
In November, sources close to the company told Reuters that AT&T would likely cut over 4,000 jobs during the next few months, in addition to the 9,000 it has already cut.
In addition to cutting costs in its shrinking long-distance telephone operations, AT&T and BT Group planned to cut 2,500 jobs when they dismantled their money-losing international joint venture Concert, sources said in October.
Once AT&T completes the sale of AT&T Broadband to Comcast, its remaining long-distance communications businesses will have about $44.2 billion in annual revenues, 4 million corporate customers, and 60 million residential customers.
AT&T is expected to earn 4 cents a share during the fourth quarter, according to research company Thomson Financial/First Call.
Shares of AT&T closed at $18.37, down 27 cents, or 1.45 percent, on the New York Stock Exchange.