AT&T to cut 12,000 employees through 2009

Company cites economic pressures as it reorganizes and cuts 4% of workforce over the next year

AT&T Inc. said today that it will lay off 12,000 workers through 2009 as it reorganizes in the face of the tough economic environment.

AT&T will spend $600 million in its 2008 fourth quarter for severance payments to those workers, who represent about 4% of the company's workforce.

The company tried to soften the blow by saying it will add employees in some areas, such as wireless, video and broadband, in order to meet customer demand. Many non-management employees who are affected will have a guaranteed job offer as stipulated in union contracts, AT&T said.

AT&T said it will reduce its 2009 capital expenditures from 2008 levels. Those plans are now being finalized and will be revealed during its fourth quarter 2008 earnings call at the end of January.

Investment firm UBS predicts that capital spending by service providers such as AT&T could decrease by as much as 10% in 2009.

AT&T's revenue and net income grew in the company's 2008 third quarter, boosted in part by a rush of new customers buying Apple Inc.'s 3G iPhone. AT&T is Apple's wireless partner for iPhone service.

Still, the company missed analysts' expectations. For its third quarter, which ended Sept. 30, AT&T reported net income of $3.23 billion, up from $3.06 billion in the third quarter of 2007. Revenue grew from $30.1 billion to $31.3 billion.

Copyright © 2008 IDG Communications, Inc.

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