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AT&T Reorg Could Be the First Step Toward Layoffs

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.

17 Responses to “AT&T Reorg Could Be the First Step Toward Layoffs”

  1. I am an employee of AT&T in an out of footprint area, which means not in Bell South or SBC territories. The reorg on the wireline side has fully collapsed an entire segment known as Select Markets. There is a lot of more employees now in the four remaining seggments. I know things are going to get pretty crazy in the next two weeks.

  2. I work for ATT publishing we had layoffs in July. First they notified people and told them they were gone… by lowest senority of course. They were given their last date. So a week later or so… the option of voluntary leave was given to us. A hanful of employees left. Those who have 20+ years. Then they came back and said those people that were laid off had to work longer by a couple weeks and that some MAY be able to stay depending on how many volunteers they got! A little backwards don’t you think? So our director told us things were done and taken care of… However November 7th we were told they are accepting volunteers again! That is the only thing they told us. Not even a date of what the last day would be. We are speculating more layoffs here! Is that possible? Maybe this time they are doing it in the right order?
    Maybe its nothing… maybe its just to get a few more gone. I doubt it. The waiting game is horrible.

  3. Elizabeth

    Yes, it is true..AT&T is under-going lay-offs and a huge re-org at this time. I am a wireline account manager and I have already seen some of my teammates let go in the past month with the ’60 day notices’. Nobody has a clue what region we will support, what our accounts will be, who we will report to..and most importantly if we will keep our jobs. We are urged to “not lose focus” and are advised to not be distracted by the “rumours” and speculation….which is absolutely absurd. We have been given very limited information (other than “I know what you know” from our manager) and receive new re-org announcements on a weekly basis. The goal is to have the new organizational structure in place by January 2009 so I am sure we will all find out if we have jobs within the next few weeks…awesome! As an employee of less than 2 years and this being my first couple of years in the workforce..I am now understanding how wonderful “Corporate America” is.

  4. Mary Brinkman

    I talked to my AT&T pals last night, and found out that the layoffs have begun. AT&T this week is giving what they call “60-day letters” to over 100 non-union employees, in addition to a handful that went out about two months ago. The “60-day letter” gives the recipient 60 days to find another job within the company, or leave.

    In addition, AT&T is getting rid of more of the workforce by a sneakier means. Last February, a number of AT&T employees were transitioned to Amdocs. Now, Amdocs is laying off some of those former-AT&T-employees now, and some later in November.

    To make it even more interesting, a few days before the layoffs were announced, Thaddeus Arroyo, Chief Information Technology Officer, sent every person in his organization an engraved crystal paperweight, celebrating AT&T’s recent IT achievements. One of my friends shopped around, and reported that the wholesale cost of the paperweight was probably about $22 per person. With over 500 people in Arroyo’s organization, that’s an interesting purchase, in light of the recent cuts (over 70 in Arroyo’s organization) and the emphasis on reducing paper in the workplace.

    Happy Halloweeen and Merry Christmas to all!

  5. “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.

  6. unknown

    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…