Feeds

AT&T chops 3,500 staff, turns to Covad for DSL

Management bears brunt for once

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

ComputerWire logo AT&T Corp plans to lay off 3,500 staff, just under 5% of its workforce, in a move that will lead to a $240m restructuring charge in its fourth quarter. More than half the job cuts are in management, and AT&T said the move is the result of "improved processes and automation" in the provisioning and maintenance of services for business customers.

It will be no surprise if the managers shown the door include those responsible for guiding its past DSL strategy, whose failure has led AT&T to switch much of its DSL traffic to the network of Santa Clara, California-based Covad Communications Group Inc.

Job cuts have become an annual ritual at AT&T, and the latest round is mild compared with the 10,000 reduction announced a year ago that led to a $1bn charge. But with revenue on the slide, ferocious competition and slim-line margins, especially in the market for business customers, this is unlikely to be the last time that the Bedminster, New Jersey-based company reduces a payroll that currently stands at 72,000.

AT&T's fourth-quarter figures are unlikely to make happy reading for investors as the company has already announced that it will take a $1.1bn asset impairment charge related to its investment in AT&T Latin America. On top of this, it will take a $200m impairment charge against its own DSL assets after agreeing the deal with Covad. Previously AT&T had based its DSL strategy on its March 2001 acquisition of defunct DSL operator NorthPoint Communications Inc for $135m.

At the time a company official said it would use the network for multiple services including local and long-distance voice and "things we haven't even begun to think about yet."

AT&T now says it will offer services using Covad's nationwide network, which passed 40 million US homes and businesses. The company already has a deal to offer DSL services to business customers using Covad's network.

AT&T said it will still offer DSL services over its own facilities in several areas of New York, Texas and California. Under the terms of the deal, Covad has given AT&T the option of buying 3 million of its shares, or 1.3% of the total.

© ComputerWire

Boost IT visibility and business value

More from The Register

next story
Scotland's BIG question: Will independence cost me my broadband?
They can take our lives, but they'll never take our SPECTRUM
Trying to sell your house? It'd better have KILLER mobile coverage
More NB than transport links to next-gen buyers - study
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
NBN Co adds apartments to FTTP rollout
Commercial trial locations to go live in September
Samsung Z Tizen OS mobe is post-phoned – this time for good?
Russian launch for Sammy's non-droid knocked back
Telstra to KILL 2G network by end of 2016
GSM now stands for Grave-Seeking-Mobile network
Seeking LTE expert to insert small cells into BT customers' places
Is this the first step to a FON-a-like 4G network?
What FTC lawsuit? T-Mobile US touts 10GB, $100 family-of-4 plan
Folks 'could use that money for more important things' says CEO Legere
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.