RealTime IT News

AT&T Cuts Staff in Focus on Wireless, Data

AT&T (NYSE:T) is laying off 12,000 employees, about 4 percent of its workforce, in an reorganization that will also increase staffing in its wireless, broadband and video business lines.

"We're seeing customer demand in those three specific areas, which are growing, and we will be adding jobs," an AT&T spokesperson told InternetNews.com. The top U.S. wireless carrier had 309,000 employees worldwide as of the end of 2007.

AT&T (NYSE: T) said current economic pressure is the main catalyst in reducing workforce numbers and 2009 capital expenditures. It added that it would provide further details during its next earnings report on Jan. 28th.

It's not clear which areas of the company will be most impacted by the staffing cuts, which are AT&T's second major reductions this year after layoffs of nearly 5,000 in early spring.

Until recently, industry experts considered wireless carriers and mobile device makers to be more resistant to the turmoil in the U.S. market. They cited increasing sales and subscriber figures are evidence the industry would be well protected going into late 2008.

The last few weeks have thrown those predictions into question, however. Several smartphone makers, including Motorola, Palm and Nokia, have warned that they would not meet revenue expectations during the next fiscal quarter.

Following the money

Yet while the high-double-digit growth seen last year in mobile device sales have dropped, wireless adoption rates remain strong -- making it one of AT&T's healthiest business segments and an enticing area for additional focus.

Gartner research released today reported 11.5 percent growth on in worldwide smartphone sales between the third quarter of 2007 and the third quarter of 2008. As a result, AT&T and its handset partners, as well as competitor Verizon Wireless (NYSE: VZ), have been reaping the benefits.

In October, AT&T posted third-quarter revenues of $31.3 billion -- a large portion of which was due to strong wireless revenue, which grew 15.4 percent to $12.6 billion. AT&T's net income totaled $3.2 billion for the quarter, up from $3.1 billion from a year earlier.

The quarter also featured AT&T's biggest subscriber gain yet, with 1.7 million new customers -- up 40 percent over the same time frame in 2007.

A large portion of that increase is tied to the carrier's exclusive sales deal with Apple (NASDAQ: AAPL). AT&T sold 1 million of the company's iPhone 3G devices during the first weekend following its debut in June, and recorded 2.4 million activations during the third quarter.

While s slim percentage of its total take, AT&T's wireless data segment proved especially strong: Revenues grew to $2.7 billion during third quarter, up 50.5 percent compared to the third quarter of 2007.

During its most recent earnings call AT&T executives cited the iPhone, and other advanced, Internet-capable devices, as crucial to its success in increasing wireless services revenue.