The cost-cutting measure comes as the third-largest U.S. carrier continues to lose subscribers, but the upcoming Palm Pre could lead to a turnaround.
As the carrier continues to lose subscribers, Sprint Nextel said Monday it would eliminate about 8,000 positions to cut annual costs by nearly $1.2 billion.
The third-largest U.S. mobile operator said the cuts would be completed by the end of the first quarter, and it would impact all levels of the company. Sprint also said it would suspend 401(k) contributions and stop its tuition reimbursement program for 2009.
"Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment," Sprint CEO Dan Hesse said in a statement. "We continue to improve the customer experience and these improvements are reflected in much higher levels of satisfaction in customer surveys and in independent performance tests. Our commitment to quality will not change."
Even though the telecom has more than 50 million subscribers, Sprint is still dwarfed by rivals AT&T and Verizon Wireless. The carrier had a dismal first three quarters of 2008, losing nearly $1 billion as customers flocked to competitors.
Sprint continues to carry a stigma about having poor customer service, which is an issue Hesse has been combating head on. Sprint's CEO has implemented a ReadyNow program that offers in-store personalized setup, and the company said it has marked improvement in customer satisfaction surveys.
Perhaps the biggest issue for Sprint is the lack of a signature handset to combat AT&T's iPhone 3G, Verizon's BlackBerry Storm, and the T-Mobile G1. But that may soon change, as Sprint will be the exclusive U.S. carrier of Palm's Pre smartphone later this year. The touch-screen smartphone's webOS operating system, gesture-based navigation, and tight Internet integration may help Sprint poach subscribers from its rivals.