Sprint cutting another 1,100 jobs

Wednesday, June 16, 2004 | 10:46 a.m.

SUN STAFF AND WIRE REPORTS

Sprint Corp., the third-largest U.S. long-distance telephone carrier and the main local phone company in Las Vegas, today said it will cut as many as 1,100 jobs.

The cuts, amounting to 1.6 percent of the Sprint workforce, are aimed at reducing costs as calling prices decline.

Of the jobs being eliminated, 850 are in the unit that provides service to businesses, with up to 250 others in jobs supporting that operation, including some in information technology, the Overland Park, Kan.-based Sprint said in a statement.

The company, which has about 70,000 employees, has slashed more than 22,000 positions since 2001.

Sprint Business Solutions President Howard Janzen said the cuts will be systemwide, but about half will be in the Kansas City, Mo.-Kan., area. Those whose jobs are being cut will be notified by mid-July, Sprint said.

In Las Vegas, there are 115 employees in business services, but it's unknown if any of them will lose their jobs, said Detra Page, spokeswoman for Sprint's Las Vegas operations.

"Fifty percent of the job cuts will come out of Kansas City," Page said. "At this time we don't have information on where the other cuts will be."

The announcement said Sprint would also make organizational changes to improve efficiency.

"We have continued to look for ways to improve the business, cut overlaps, and move as close to the customer as possible," Janzen said.

Since the beginning of the year, Sprint has offered business customers a package that includes long distance, wireless and local services.

"There's been good acceptance from business customers, but when you look at those segments, the long-distance piece is undergoing very strong pricing pressure because of the competitive nature of the business," he said. "Part of this change is responding to that pressure."

Janzen said long-distance revenue from business customers was down by 4 percent in the first quarter, compared to a 9 percent drop for AT&T and 17 percent for MCI.

"We are certainly doing a better job than the competition, but it is still a decline and that is one of the things we are responding to, to be sure we can continue to drive costs down and remain competitive," he said.

Janzen said that with the regional Bell operating companies now having approval to provide long-distance service in every state, the field has become increasingly competitive.

"As a result we have seen significant declines in price," he said. "That pressure has been very strong over the last four to six months."

The long-distance industry is suffering everywhere, analysts say. "The long-distance business is certainly dying," said Kurt Funderburg, an analyst at Chicago-based Harris Associates LP, which manages about $40 billion in assets in the U.S. and owns 19 million Sprint shares. "They need fewer people to carry out the business and they need to do it cheaply."

The cuts are part of Sprint Chief Executive Gary Forsee's efforts to reduce annual costs by $1 billion before 2006 as competition increases in long-distance and wireless calling. Long-distance revenue has dropped for 13 straight quarters and Sprint is increasingly relying on wireless gains to boost sales growth.

Corporate calling prices have slumped from about 10 cents a minute 10 years ago to about 3 cents today.

Sprint said June 4 that it will close a wireless call center near Chicago as part of its cost-cutting plans, eliminating 1,000 jobs. In May, the company said it would cut 2,550 jobs, 550 more than it initially announced in November. The cost of cutting those jobs was about $90 million, Sprint said at the time.

Sprint said it still expects 2004 profit of as much as 75 cents a share and cash flow of $1.8 billion. Second-quarter results will be released on July 22.

Shares of Sprint were down 36 cents to $17.51 in morning trading today on the New York Stock Exchange.