It will be no surprise if the managers shown the door include those responsible for guiding its past DSL strategy, whose failure has led AT&T to switch much of its DSL traffic to the network of Santa Clara, California-based Covad Communications Group Inc.
Job cuts have become an annual ritual at AT&T, and the latest round is mild compared with the 10,000 reduction announced a year ago that led to a $1bn charge. But with revenue on the slide, ferocious competition and slim-line margins, especially in the market for business customers, this is unlikely to be the last time that the Bedminster, New Jersey-based company reduces a payroll that currently stands at 72,000.
AT&T’s fourth-quarter figures are unlikely to make happy reading for investors as the company has already announced that it will take a $1.1bn asset impairment charge related to its investment in AT&T Latin America. On top of this, it will take a $200m impairment charge against its own DSL assets after agreeing the deal with Covad. Previously AT&T had based its DSL strategy on its March 2001 acquisition of defunct DSL operator NorthPoint Communications Inc for $135m.
At the time a company official said it would use the network for multiple services including local and long-distance voice and things we haven’t even begun to think about yet.
AT&T now says it will offer services using Covad’s nationwide network, which passed 40 million US homes and businesses. The company already has a deal to offer DSL services to business customers using Covad’s network.
AT&T said it will still offer DSL services over its own facilities in several areas of New York, Texas and California. Under the terms of the deal, Covad has given AT&T the option of buying 3 million of its shares, or 1.3% of the total.
Source: Computerwire
