More Job Cuts, Retrenchment At Sprint



Sprint Nextel said today plans to cut 4,000 more jobs, close 125 stores and eliminate thousands of third-party distribution points as it copes with "continued downward pressure" on its subscriber numbers, revenues, and profitability.

Shares of the nation's third-largest wireless carrier, which has struggled since its merger with Nextel two years ago, plunged 25 percent in New York Stock Exchange trading to $8.65 as of 1:27 p.m.

The actions are the first significant steps under new chief executive Dan Hesse, who took the helm at the Reston-based company last month. (See story.) In a statement, Sprint said the cuts would reduce its labor costs by as much as $800 million by the end of 2008.

Little has gone right for Sprint since its $35 billion merger with Nextel in 2005. The two companies had trouble integrating their respective technologies and corporate cultures. (See story.) Ensuing network and customer service problems have led to several quarters of subscriber losses.

In October, chief executive Gary D. Forsee resigned under pressure from board members and investors dissatisfied with the company's performance and concerned about spending on its new WiMax wireless network.

The company chopped 5,000 jobs from its payroll last year. The latest job cuts leave Sprint with a workforce of about 60,000. "The employee headcount reductions are expected to be completed in the first half of the year and will include management and non-management positions throughout the company," Sprint said.

The company said it would offer a a voluntary separation plan to its employees. Displaced workers would receive severance pay and outplacement services. Sprint plans to record a charge against its first quarter earnings to reflect the costs of the job cuts.

The store closings represent 8 percent of its operations. The company has approximately 20,000 total distribution points, including nearly 1,400 company-owned retail locations.

Sprint continues to press ahead with the rollout of its new WiMax wireless network, which it hopes will give it an edge over competitors Verizon, AT&T and T-Mobile. The company has said it would spend up to $5 billion to deploy the largely untested network, called Xohm, but the cost has drawn criticism from investors and others in the industry.

There was no word in Sprint's statement about the fate of its corporate headquarters in Reston. Last month, Hesse said he is considering moving Sprint to the Kansas City area, where the company has its operational headquarters. The company located its corporate offices in Reston after the merger with nextel.

The company expects to release its financial results for the fourth quarter in late February.

By Dan Beyers  |  January 18, 2008; 1:51 PM ET  | Category:  Sprint
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Comments

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Sprung's senior management continue to be inept.

Posted by: bolis | January 18, 2008 9:39 AM

Sprint is losing customers not only due to issues faced because of the merger with Nextel but because of poor customer service and poor billing practices. I have called every month prior to paying my bill because of additional costs for vision pack and text messages which were included in my initial contract. I had unlimited text messaging and free vision pak on one phone and the other was $5. When I asked a manager about the changes, he stated that the plan was old and when I upgraded my phone they couldn't find the code for my contracted plan. The more I talk with family and friends of Sprint they are having the same proiblems to include placing you on another two year contract when you purchase another phone when your phone dies out. Sprint needs better business practices

Posted by: Elaine | January 18, 2008 3:43 PM

I've had long distance service with Sprint for a long time. Since the merger (or is it split?) I get my bill from Embarq. If I call the 800# on the bottom of my paper invoice, I eventually get to a representative who answers "Sprint/Nextel". When I try to ask a question they tell me they can't help since I am an Embarq customer and refer me to an 866#. That number is unreachable. Who is my carrier and how do I reach them?

Posted by: GeneralComment | January 18, 2008 6:59 PM

This is what sprint, staff and management deserve: unemployment. In fact, I hope any laid off customer service reps leaving the building get hit by a bus on the way out the front door and I mean that. Overcharged, lied to, hung up on at one occasion. They deserve this and anything else that falls on their tiny brained heads. I hope newly appointed CEO Hesse is updating his resume as we speak because these problems are too far gone to try to correct. SPRINT BLOWWWWWWWWWWS!

-proud new Verizon customer
(don't walk from Sprint, RUN!)

Posted by: Sprintsuxballz | January 26, 2008 6:19 PM

Its the outsourcing to India.. That is the problem. It may be cheap to employ these people, But because of this they are loosing so many customers. Nothing against the reps in India an other countrys Its just the language barrier and nothing gets done to help the customer.

Posted by: YOYO | February 26, 2008 5:26 PM

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