The largest telecommunications services provider in the US, AT&T (www.att.com), plans to lay off 12,000 people and reduce new technology spending, amidst similar cuts across an industry which is beginning to feel the pain of the economic nosedive, according to mainstream news reports.
According to AT&T's Thursday announcement reported by the New York Times, the job cuts are due to the economy and lower consumer spending. AT&T is also considering a reduction in the amount it spends on network upgrades next year.
With four percent of its workforce on the chopping block, a Business Week report suggests AT&T's cutbacks, along with similar cuts at Verizon (www.verizon.com) and Sprint Nextel (www.sprint.com), could spell "the beginning of a torrent of staff reductions and spending cutbacks in the $1 trillion telecom industry." In the third quarter, Verizon laid off 2,700 employees and Sprint Nextel, 4,000.
An optimistic Bloomberg report Thursday suggested that AT&T has been weathering the storm better than its competitors, noting that it chances are good that it will be the only carrier to report accelerating growth this quarter, gaining 1.5 million contract customers, up from 1.2 million a year earlier. Robert W. Baird & Co. analyst Will Power told Bloomberg that AT&T may be unaffected by the recession as consumers continue to covet luxury brands like the iPhone will prevail even as they scrimp elsewhere.
A temporary network upgrade may have interesting implications for AT&T's suppliers, which include companies like Fujitsu Network Communications (http://www.fujitsu.com/us/services/telecom/), KGP Telecommunications (www.kgptel.com) and ATC Logistics & Electronics (www.atcle.com). While staff reductions leads to job outsourcing to contractors, a reduction in workload may help neither staff, nor contractors.
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