Businessweek Archives

For A Pink Slip, Press 2


News: Analysis & Commentary: STRATEGIES

FOR A PINK SLIP, PRESS 2

Thousands of AT&T managers have a tough decision to make this holiday season. Should they take a buyout the company offered on Nov. 15 to 77,800 of them, which expires Dec. 29? Or should they wait and hope they'll survive layoffs that the company is expected to announce by mid-January?

AT&T's 302,000 employees have all known that their jobs might be on the line since Chairman Robert E. Allen announced on Sept. 20 that by 1997 the company will split into three parts--telecommunications equipment, communications services, and computers. And it's not as though employees haven't gone through this before. In the past 11 years, AT&T has shed 125,800 workers.

This time, though, AT&T needs to move quickly. If Congress sticks to its timetable and passes a bill deregulating the phone industry by Christmas, AT&T's $49 billion communications-services business will find itself in a far more competitive industry very quickly. The seven Baby Bells are all gearing up to offer long-distance service as soon as they are allowed to, while AT&T wants to duke it out in local calling. AT&T's $20 billion equipment business has already lost key contracts this year and is well behind its competitors in the international market.

Employees might find some solace in the knowledge that AT&T could end up adding as many jobs as it drops as it enters new businesses. New markets have kept the communications-services business from coming anywhere near its February, 1994, pledge to cut its staff by 15,000 over two years. According to Harold W. Burlingame, AT&T's senior vice-president for human resources, AT&T may hire as many as 20,000 people this year: "We will downsize and grow at the same time, as we address new markets and new opportunities."

BAH, HUMBUG. Still, layoffs are a virtual certainty. The current buyout offer is less generous than one AT&T made in 1989, and only 10% of the 120,000 eligible managers took that one. "I think the company is telling the truth when they say they have no clue as to what the take rate will be," says analyst Richard C. Toole of Merrill Lynch & Co. That will change soon. Burlingame says AT&T expects to know by late December how many layoffs will be necessary. Some managers will get post-breakup assignments by mid-January, and "unassigned managers will be asked to leave involuntarily." That's a cheery holiday message.By Catherine Arnst in New York


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus