Sprint Nextel on Monday announced plans to lay off about 8,000 employees by the end of the first quarter. The move is expected to reduce labor costs $1.2 billion a year.
The job cuts span all levels of the company in various geographic locations and include about 800 positions Sprint expects to be eliminated under a voluntary separation plan launched late last year. The cuts come at a short-term cost as Sprint said it expects to spend $300 million in the first quarter for severance and related costs.
“Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment,” said Sprint CEO Dan Hesse. “We continue to improve the customer experience, and these improvements are reflected in much higher levels of satisfaction in customer surveys and in independent performance tests. Our commitment to quality will not change.”
Staying Competitive in a Recession
Sprint stressed that it is committed to maintaining high standards of customer service, so cuts in its customer-care department will be fewer than in other areas. Sprint serves about 51 million customers.
However, the remaining employees will see fewer benefits. Following the lead of other companies, Sprint’s cost reductions suspend the 401(k) match for 2009, extend a 2008 suspension of salary increases through 2009, and suspend its tuition-reimbursement program for 2009.
Sprint said its job cuts are part of a move to breed a more competitive cost structure and remain financially secure in a “challenging economic environment.”
Positioned for the Storm
Sprint’s near-immediate layoffs are a preface to the company’s fourth-quarter earnings release on Feb. 19. Other technology companies have made similar moves, either just before or just after their earnings announcements, including Microsoft and Intel.
“Sprint has seen a lot of churn,” said Mike Disabato, a senior analyst at the Burton Group. “AT&T took a lot…