When the largest phone company in the U.S. decides that it’s time to get leaner and meaner, it reduces its workforce by 12,000.
What this means in terms of the overall picture is that about 4 percent of the workforce will be sent home. AT&T, based out of Dallas, has not been spared from the economic downturn, and even the exclusive deal garnered with Apple over the iPhone wasn’t enough to get their numbers to where they felt they needed to be.
Taking a cue from its smaller competitors, AT&T is pulling back in the face of consumer spending which is slowing down and a jobless rate which is climbing higher and higher. According to Chief Executive Officer Randall Stephenson, AT&T is going to focus on some of the faster growing businesses, such as its wireless unit, to help profit margins remain steady. In fact, Stephenson plans to keep hiring in the wireless unit sector of the company.
According to Bloomberg News, which has been closely following the AT&T saga, at this time, the wireless business makes up over a third of all sales for AT&T. Contrast that with its wireline unit, more than half of all sales, which dropped 2.2 percent last quarter. In terms of actual customer base, this means that AT&T lost almost 1 million customers for their primary home lines.
Obviously, in today’s economy, more and more individuals and businesses are rethinking the entire “home” line concept. With many Americans using their cell phones nearly five times as much as their home lines, it’s easy to see why AT&T would want to focus onto that particular growing market.
Back in April, AT&T announced cuts of 4500, some of which were in its home-phone business, which had been losing customers to both cable operators and some of the wireless competitors.
Adding to the troubles at the once-powerful giant, more and more carriers find themselves competing for less and less new customers. The pool of new wireless users is growing more and more shallow, now that wireless penetration has reached 84 percent.
The final problem was that growth has slowed for the “smart” phones – phones which are equipped for high-speed Internet use. Gartner Inc, which tracks smart-phone information, said that growth ebbed last quarter to 11.5 percent – the lowest level since Gartner started tracking it.
Naturally, although the news is grim for those individuals who have lost their jobs, AT&T admits that, in the long run, by paring down its operations and tightening the entire organization, it will emerge both leaner and more competitive, which will surely be good news for shareholders.