Sprint today said it will lay off 8,000 people, which is more than 14% of its staff, marking its third consecutive year of beginning with layoffs.
The announcement affects more people than expected, as handset sales are slow across the industry. Savings from reduced labor across all departments and regions will be around $1.2 billion, officials said.
Changes should be done by March 31 and include 850 people who choose voluntary buyouts. Sprint also said it will save money this year by suspending 401(k) matching, annual salary increases and tuition reimbursement.
“Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment. We continue to improve the customer experience and these improvements are reflected in much higher levels of satisfaction in customer surveys and in independent performance tests. Our commitment to quality will not change,” CEO Dan Hesse emphasized in a statement today.
Sanford Bernstein analyst Craig Moffett noted that layoffs are not enough to fix Sprint considering tough competition and a tougher economy.
“It’s a painful but necessary step. But at the end of the day, layoffs are never more than a Band-Aid. They can help stop the bleeding, but they don’t do much to cure the patient,” he said. “Unless they actually address the core problem, which is growth, they haven’t really gotten to the heart of it.”
Bankruptcy is not imminent, but whether Hesse and CFO Bob Brust can execute a successful turn-around remains to be seen, Moffett said. Meanwhile, “our advice has been to steer clear of Sprint shares and that continues to be, we think, the most prudent course.”
Verizon will report its earnings tomorrow and AT&T will report Wednesday. Moffett said he does not expect layoffs from those companies.
Filed Under: Infrastructure