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.
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