Sprint cutting jobs and stores
The phone company has had trouble attracting subscribers while facing customer complaints.
KANSAS CITY, Mo. - Wireless phone company Sprint Nextel Corp. said yesterday that it planned to slash 4,000 jobs and close 125 retail locations to gird itself for an expected slowdown in subscriber growth and revenue.
Shares in the company, which has been struggling to keep up with AT&T Wireless and Verizon Wireless, closed down nearly 25 percent, to $8.70.
The job cuts and store closings are intended to cut $700 million to $800 million a year in labor costs starting at the end of 2008. The company said it would book a charge in the first quarter to cover severance costs, but did not disclose the amount.
Sprint said it would also close 4,000 of its 20,000 third-party distribution points, such as stalls inside other consumer-electronics retailers. The retail store closures represent 8 percent of its 1,400 company-owned shops.
The company also said it could record a charge in the fourth quarter of 2007 for goodwill impairment, reflecting the decreased value of its assets and share price. The company expects to issue its fourth-quarter earnings report Feb. 28.
Sprint finished the year with 53.8 million subscribers.
Yesterday's announcement follows several quarters of poor performance. Sprint has had trouble attracting new subscribers while facing growing customer-service complaints.
The troubles prompted the company to oust chief executive officer Gary Forsee and replace him with Dan Hesse, the former CEO of Sprint spinoff Embarq Corp.
Jeff Kagan, an Atlanta wireless analyst, said yesterday's announcement is the first step in Hesse's efforts to "stop the bleeding" at Sprint.
The company's struggle dates to Sprint's 2005 acquisition of Nextel Communications Inc., which has left it with incompatible networks, technical glitches, a customer base filled with credit-compromised subscribers, and a dubious marketing effort.