C. Michael Armstrong, AT&T Corp’s new chairman and CEO, is preparing to axe up to 19,000 jobs as part of a massive restructuring plan due to be unveiled next week, according to industry sources. Armstrong is set to meet Wall Street analysts on Monday, where he is expected to detail plans to cut between 10% to 15% of AT&T’s 128,000 workforce as part of a reorganization that will aim to prepares the company for battles in new areas such as local telephone services as well as its plans for international alliances and internet strategy. He may also be looking to change the management line up. Armstrong’s first big meeting with analysts, major shareholders and money managers will reveal his strategy for getting AT&T back on track. The company is continuing to bleed market share in its core long-distance business and the company has turned in three straight quarters of lower profit. The new strategy will also confirm how quickly Armstrong is willing to cut into the company he took over in November. Analysts are also expecting cuts of $3bn-$5bn in SG&A expenses as well as a move to write down aging assets, such as billing and software systems. Although AT&T did confirm the meeting was set it declined to comment on any of the issues that will be dealt with at the meeting. The meeting is scheduled to take place in New York on the same day that AT&T reports fourth-quarter earnings. Prior to meeting the analysts Armstrong is scheduled to address employees. According to the Communications Workers of America, the union which represents about 40% of AT&T’s workers, about 15,000 jobs are to go, mostly in management and management support, according to a source quoted by Reuters. We’ve been assured that union members won’t be affected. They are much more management top-heavy. Those areas – management and management support – is where the fat is,” the source said. Adding that AT&T plans to achieve most of the cuts by offering early retirement packages and through attrition. Armstrong also looks set to replace members of his executive team. He has been openly critical of AT&T’s existing strategy to enter the local telecoms market and with the acquisition of Teleport Communications Group at the end of last year, Teleport Chairman and CEO Robert Annunziata looks set to take over Harry Bonnet’s current role as VP and general manager of AT&T’s local operations. One top executive already has decided to leave. After 26 years at AT&T, Marilyn Laurie, executive vice president for brand strategy and marketing, is set to retire on April 1.
