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Atlanta Journal-Constitution's report on BST 5,000 jobs at risk

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The Atlanta Journal-Constitution: 5/18/02 ]

BellSouth cuts put 5,000 jobs on the line

By KATHY BRISTER and PERALTE C. PAUL
Atlanta Journal-Constitution Staff Writers

BellSouth employees are preparing for up to 5,000 job cuts by the end of September.

Employee Ed Howard wasn't surprised by the announcement Friday that management and hourly jobs would be shaved. The step is due to weakened demand for BellSouth's core business, local phone service.

Even though the Atlanta-based company announced earlier this week the long-awaited news that BellSouth soon will sell long-distance service, Howard recognized the signs.

He came to BellSouth less than a year ago after being laid off from telecom equipment maker Lucent, which had an operation in Norcross. He watched about 4,200 BellSouth employees get pink slips last fall.

Howard, who works with vendors that supply BellSouth, said all he can do is wait for details on how the fresh round of job cuts will be carried out.

So far, this much is clear: The cuts will come in two shifts and will affect a broad range of workers across the company's nine-state region. They are likely to hit hardest in metro Atlanta, where most of BellSouth's 85,740 employees work.

The first round of cuts will be voluntary. Management-level employees who raise their hands will get 7 percent of their salary for every year of service, up to 150 percent. Hourly workers who volunteer will receive severance packages based on contract agreements between the company and the Communications Workers of America, which represents more than two-thirds of BellSouth employees.

Volunteers must put in their notice by June 14 and would leave BellSouth's payroll by June 30.

If too few employees volunteer to check out, the company will begin announcing layoffs in July. Laid-off management employees would leave the payroll by Aug. 31. Hourly workers, covered under the union contract, would be gone by the end of September.

The job cuts will not affect BellSouth's ongoing strategy of consolidating most of its Atlanta workers at centers at or near the Lindbergh, North Avenue and Lenox MARTA stations, said BellSouth spokesman Joe Chandler.

Analysts had anticipated BellSouth's job cuts, especially after a layoff announcement earlier in the week from SBC Communications, another of the Baby Bells. SBC said it would cut 5,000 jobs, or about 2.6 percent of its work force, in the second quarter.

A telecommunications slump that started with the dot-com bust in 2000 has dragged down upstart Baby Bell competitors, then long-distance providers and, in recent months, the Bells themselves.

"It really is not a huge surprise," said Zach Wagner of brokerage Edward Jones. "I think BellSouth is behind the curve in cutting costs. It needs to shift not only its business focus, but also its employee base away from local phone service."

BellSouth Chairman and Chief Executive Officer Duane Ackerman acknowledges the company must demonstrate to Wall Street a willingness to decrease costs. Nevertheless, he said, BellSouth has looked upon job reductions as a last resort.

The company claims 4.2 million of the 25 million phone lines connecting homes and business across the Southeast have been lost to competitors.

Still, BellSouth is the dominant regional player, and competitors complain about the difficulty of going up against the former monopoly.

Other business areas -- such as data -- are growing, but not as rapidly as they might in a stronger economy. BellSouth executives have said they expect revenue across all the company's business areas to grow just 1 percent this year.

BellSouth will take an after-tax charge of $250 million to $300 million to pay for costs related to the job layoffs.

Investors did not immediately smile on the company's plans. BellSouth stock closed Friday at $33.19, down 31 cents. The stock has fallen nearly 20 percent in the last 12 months.

-- Staff writer Tony Wilbert contributed to this article.

 

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