Citing sustained pricing pressure, regulatory changes and its decision to stop marketing traditional residential services, AT&T announced a series of restructuring actions. These include:
- further job cuts that significantly exceed its previously estimated workforce-reduction target of 8% in 2004. The company now expects to reduce total headcount by more than 20% in 2004. Approximately three quarters of the employees affected in 2004 have already been notified or departed earlier this year. As a result of ongoing workforce reductions, the company will record a restructuring charge in the third quarter of approximately $1.1 billion.
- a non-cash charge of approximately $11.4 billion in the third quarter of 2004 to recognize the asset impairment. This action will reduce AT&T's depreciation expense by approximately $1.0 billion in the second half of 2004.
"In response to recent regulatory developments and a highly competitive market, we have made some tough decisions to reduce our workforce and cut costs," said AT&T Chairman and CEO Dave Dorman. "Ongoing investments in our network and systems around the world have allowed us to significantly improve customer-service metrics while driving industry-leading productivity."
Despite the restructuring, AT&T still expects to generate free cash flow in line with its previously established targets for 2004. The company said it is on course to finish the year with net debt of under $7.0 billion, a reduction of almost 50% over the past two years. http://www.att.com
- In July 2004, citing changes in regulatory policy , AT&T announced its historic decision to shift its focus away from traditional consumer wireline telephony.
