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Summary:

AT&T’s move to reorganize itself into four business units — consumer, business, infrastructure and diversified products — is likely a precursor to layoffs, according to sources within the company who asked not to be named.

AT&T’s move to reorganize itself into four business units is likely a precursor to layoffs, according to sources within the company who asked not to be named. The reorg comes as AT&T tries to adjust to the realities of the credit crunch, a diminishing access line and DSL business, and increased headcount caused by two large mergers in the last three years.

News of the reorg, which will see the creation of consumer, business, infrastructure and diversified products business units, trickled out yesterday. John Stankey, the former president of AT&T’s telecom operations, will head the infrastructure division; Ray Wilkins will remain CEO of the diversified businesses unit; and Ronald Spears will head the business unit. Ralph de la Vega, currently the CEO of AT&T’s wireless business, will head up the consumer business, which will contain wireless, broadband and video services. AT&T subsequently confirmed the moves, saying it wants to make consumer products work better across its portfolio of devices.

The reorganization will better align the company as it competes against the cable carriers. Just yesterday we noted how the phone companies have a hard time attracting customers to their triple-play bundles because of speed issues on DSL lines. Once those broadband connections are upgraded, the ability to combine data, voice, video and wireless for a quadruple play could put the carriers ahead of cable. But in order for that to work, the old division between wireline services, such as U-verse, and wireless needed to come down.

However, as the company streamlines, it’s also likely to find redundancies. Managers inside AT&T expect that they’ll soon get targets for headcount reductions ranging anywhere from 5 percent all the way to 20 percent in some areas of the company (I bet DSL and wireline will be hardest hit). When asked about layoffs via email, AT&T spokesman Marc Bien said, “Regarding headcount, at this time, we have no specific plans for workforce changes related to this new organizational structure.”

Employees believe it’s only a matter of time. News of rising costs related to AT&T struggling to sell its short-term debt, and the recognition that costs still need to be trimmed in the wake of its acquisition by SBC Communications (which then took the AT&T brand) in 2005 and BellSouth in 2006, have many concerned. Earlier this year the carrier announced a workforce reduction of 1.5 percent (about 4,650 workers) in its local phone business, but it still employed 307,550 people as of June 30. I expect that number will drop again soon.

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  1. Alan Weinkrantz Wednesday, October 1, 2008

    Why not create a special class of stock that lets residential users pay, $10 extra to buy stock in AT&T?
    You pay for it on your phone bill!

    See: http://alanweinkrantz.typepad.com/3screens/2008/10/hey-randall-ins.html

  2. BLAME THE iPhone!

  3. Well there reducing DSL employees already. About 100 or more have retired or been told to find a job elsewhere in the company. It’s sad when it affects you. And to think a few years earlier they had valet parking on the building because they crammed too many employees in a building designed for less. That was when DSL was booming. Now AT&T is not longer a good place to work for. The company has become a work to miss the reductions company. But then again since 1984 AT&T has been that…

  4. Could AT&T “reorganization” be a precursor to layoffs? | Idiot Inc. Thursday, October 2, 2008

    [...] GigaOM is citing sources “inside the company” that AT&T’s upcoming reorganization is in preparation for a round of firings. Many employees believe its only a matter of time. [...]

  5. Could AT&T “reorganization” be a precursor to layoffs? | Idiot Inc. Thursday, October 2, 2008

    [...] GigaOM is citing sources “inside the company” that AT&T’s upcoming reorganization is in preparation for a round of firings. Many employees believe its only a matter of time. [...]

  6. TPile » Blog Archive » Massive AT&T Reorganization, Possible Layoffs? – Nation’s biggest ISP responds to markets, cable competition… Thursday, October 2, 2008

    [...] a major reorganization in order to respond more quickly to cable competition. Managers tell GigaOM privately that they’re expecting layoffs between 5% and 20% before long, thanks to declining [...]

  7. THIS COMPANY DOESN’T GIVE A SHIT ABOUT ITS EMPLOYEES

  8. “the phone companies have a hard time attracting customers to their triple-play bundles because of speed issues on DSL lines”

    Uh, no. The phone companies have a hard time attracting (and keeping) customers because of their SADISTIC PRICING SCHEMES.

    Just last month, my father FIRED AT&T because the price of his triple-play subscription had reached $178/mo. How absurd a price for something offered for less by the competition! AT&T: You reap what you sow. RIP.

  9. AT&T is Sitting Pretty with iPhone and U-verse – GigaOM Wednesday, October 22, 2008

    [...] earlier this month reorganized its business into consumer and business related segments, but reports wireless and wireline sales separately. The carrier is watching is landlines and DSL [...]

  10. AT&T is Sitting Pretty with iPhone and U-verse – GigaOM Wednesday, October 22, 2008

    [...] earlier this month reorganized its business into consumer and business related segments, but reports wireless and wireline sales separately. The carrier is watching is landlines and DSL [...]

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