SBC, AT&T to Slash Jobs Following Merger

SBC plans to cut about 13,000 jobs following its planned merger with AT&T, top officials with the companies said. Cuts include 1,700 jobs from the sales and 3,400 from business operations. The cuts would equal about 12% of their combined workforce. The companies had already announced a combined 12,000 in jobs losses prior to the merger. Observers said the job cuts could play a role in any fights over the merger in the affected states.

Medley Global Advisors said in a research report that given the job cuts, the merger could face a tough fight politically in states ranging from Ohio and Ill. to Cal. “The deal will raise political concerns in state legislatures across the country and in particular former Ameritech, Pacific Bell and Southwestern Bell states,” Medley said. “Regulatory agencies and Attorneys General in these states will examine how the deal will impact their states’ economy and jobs.” Non-SBC states N.Y. and N.J. are likely to have concerns after AT&T jobs exit to Tex. “The Non-SBC states… have high profile gubernatorial races coming up and economic and labor issues related to the deal are expected to emerge as the campaigns get underway,” Medley said. “In N.J., where AT&T’s corporate headquarters are located, candidates for state and federal office will be forced to address the work force reduction issues.”

In a call with investors Tues. in which they discussed the staff cuts, SBC CEO Edward Whitacre and AT&T CEO David Dorman faced sometimes tough questions. One analyst observed that SBC “almost bragged” that the price offered for AT&T was less then the net present value of the synergies. “I couldn’t care less if 3 people are going to go from the board of AT&T to the board of SBC given the industrial decline” of AT&T over the last 5 years.

Dorman also denied that AT&T sold itself too cheaply. “We haven’t been hiding under a bushel basket,” he said. “In terms of people who could possibly do this transaction, there’s only 3,” i.e., SBC, Verizon and BellSouth. An analyst asked Dorman pointedly if he had cut a deal with SBC. He’s president and a dir. of the new company. “It’s very straightforward,” Dorman answered. “That’s up to SBC, Ed [Whitacre] and the board of directors. I've offered my services to be there as long as they would like me to in an appropriate role so there’s no soft promise or hard promise or anything else.”

Sen. Inouye (D-Hawaii), ranking member of the Senate Commerce Committee, said the Dept. of Justice, FCC and possibly Congress should review the SBC-AT&T merger to make sure it serves the public interest and protects consumers. The merger announcement was expected, given the changing nature of the market, Inouye said in a statement: “While I am not ready to applaud or criticize this proposed merger, I do believe it raises a number of questions about the effect on consumers, which must be carefully answered before any approval can be given.”

Meanwhile SBC’s and AT&T’s stock prices recovered slightly Wed. after falling after the merger was announced Mon. SBC was up 47 cents for the day and AT&T 46 cents at the close of regular trading. Friedman Billings Ramsey, meanwhile, cut its 12-month price target for SBC $1 to $22 following the merger announcement. - Howard Buskirk