AT&T Layoffs: The Tip of a Telecom Downturn

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com/research/stocks/snapshot/snapshot.asp?symbol=ALU'>ALU), which make much of the gear used in telecommunications networks. It also bodes ill for companies such as Cisco Systems (CSCO) and Juniper Networks (JNPR), which make networking gear. At AT&T alone, UBS analyst John Hodulik expects overall capital expenditures to drop 10% to 20% next year, from $20 billion in 2008.

Layoffs could be yet another way for carriers to slash costs. Moody's Economy.com forecasts that the industry will shed 15,000 jobs between October and the end of 2009, in addition to some 16,000 positions already lost in wireless, landline, and satellite industries in the first nine months of this year. The latest round of cuts should help AT&T save $720 million a year, Hodulik estimates. AT&T will incur a charge of $600 million in the fourth quarter.

Analysts also expect more cuts at Verizon, Sprint, and others. "We'll see continued layoffs," says Jennifer Fritzsche, an analyst at Wachovia Capital Markets. Neither AT&T nor Sprint would comment on strategy. "This is a dynamic and competitive industry," says Verizon spokesman Alberto Canal. "We continually assess and adjust the size of our workforce, reducing staff and hiring staff as needed to keep our cost structure in line with this competitive marketplace."

Business Exchange related topics:
AT&T
Telecom Industry
Corporate Layoffs

Kharif is a reporter for BusinessWeek.com in Portland, Ore.