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AT&T Offers Buyouts to More Than Half Its Managers : Telecom: The offer comes two months after the firm said it would break into three separate public companies.

November 16, 1995|Times Staff and Wire Services

NEW YORK — AT&T Corp., laying the groundwork for its breakup into three companies, on Wednesday offered a buyout to more than half its 151,000 managers.

The offer, which could result in a charge, came two months after AT&T said it would break into three separate public companies, and as rival Sprint Corp. announced job cuts Wednesday. Both companies' moves are part of an industrywide effort to reduce costs and brace for increased competition.

AT&T offered the buyout to about a quarter of its work force. The nation's largest long-distance company would not say how many of the 77,800 eligible people are expected to take the buyout.

The managers, which AT&T defines as salaried employees, have until Dec. 29 to accept or reject the offer. If not enough sign up, layoffs could begin by the end of January, the company said.

"It's like being a G-10 in the government," said Ken Leon, analyst at Lehman Bros. "It's a management title, [but] many of them aren't really managing people."

AT&T is expected to cut about 25,000 jobs from its 302,000-worker payroll by 1997, including those cut through the buyout offer, analysts said.

The company has yet to say how many job cuts will result from the restructuring.

"AT&T recognizes that it's about to engage in the fight of the century--the battle with the regional Bell operating companies," said Brian Adamik, analyst at the Yankee Group, a market research firm in Boston.

A pending bill in Congress would increase competition in the long-distance and local phone industries, allowing the Baby Bells into the $70-billion long-distance market for the first time.

"They are going to use a combination of early retirement incentives and firings to reach their goal," said Bette Massick Colombo, analyst at Bear Stearns & Co. AT&T will save about $50,000 a year from each job cut, she said.

AT&T shares rose $64.50, up $1.25, in New York Stock Exchange trading Wednesday.

About a third of those offered the buyout, or as many as 26,000 managers, will take it, estimated Ken McGee, analyst at Gartner Group, a market research firm based in Stamford, Conn.

If analysts' forecasts prove accurate, AT&T's buyout plan could save it $1.3 billion a year.

Other large phone companies are shedding jobs. MCI Communications Corp., the nation's No. 2 long-distance carrier, said in August that it will fire as many as 3,000 workers, or 7.1% of its work force.

Sprint, the No. 3 carrier, has said it will cut 1,600 jobs in its local phone unit, taking a charge of $55 million.

The accounting change, which has been undertaken by other large local phone carriers, will reduce fourth-quarter earnings by up to $650 million.

Another $45 million to $55 million will be spent on severance benefits to employees. Together, the special charges will reduce earnings between $1.70 to $2.01 per share.

In NYSE trading Wednesday, Sprint was unchanged at $37.625.

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