An army of employees has left AT&T Corp since the break-up of the Bell System in 1984, but the bloodletting is still far from over, and yesterday the company put numbers on the cost to employment of its planned subdivision into three companies – and it is not a pretty sight. It is to take a $6,000m charge against its fourth quarter figures to cover the cost of its new break-up, which includes the cost of getting rid of nearly 40,000 more employees. About 30,000 of the job cuts will be compulsory redundancies after the disappointing response by employees to its voluntary buyout package at the end of last year. The axe will fall on about 70% of the positions by the end of this year with the rest within three years. After tax, the charge, which covers the planned staff reductions, as well as facility closings and asset writedowns, will result in a post-tax charge of $4,000m or about $2.50 a share. The net profit for the first nine months of 1995 was $2,820m, and for all of 1994, its profits were $4,700m, so it may just manage a positive result despite the charge. The cuts were in line with expectations and went down well in the market, where the shares jumped $2.75 to $67.50 in early trading after the announcement. The moves announced primarily affect the new AT&T company, which will be the telephone service company, and the new new systems and technology company, which will take in all AT&T’s networking equipment, telephone exchanges and phones, and chips. AT&T Global Information Solutions, the former NCR, takes relatively light cuts because it sliced 8,500 people from the payroll in September, at a cost after tax to AT&T of $1,170m. The total reductions include about 10,000 corporate-wide staff jobs in areas such as information systems, personnel and financial operations; the majority of the cuts will be in US-based operations. AT&T also plans to reduce the value of some assets, including its Unitel Inc Canadian telecommunications venture and several other international units, and will modify several of its services, which will require writing down the value of some proprietary software and hardware; it will also write down the value of some unneeded network facilities, such as microwave towers, and refocus its undersea cable operations. The charges include about $2,600m pre-tax for redundancy pay and related costs, about $1,700m in asset writedowns, and $1,100m for closing, selling or consolidating facilities. Other moves totalling nearly $700m are also included. The lay-off figures include 4,000 that may transfer to one or other of the businesses to be spun off. AT&T also said it was on track to file with the US Securities & Exchange Commission for an initial public offering for the systems and technology company, and still expects to complete the transactions by year-end. If the two new companies were launched today and included all force reductions contemplated, AT&T estimates that the new AT&T would have 110,000 employees, a cut of 17,000 and the systems and technology company would have 108,000 employees, after a cut of 23,000.
