Bloodletting Continues As Sprint Cuts 4,000 Jobs - InformationWeek
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1/18/2008
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Bloodletting Continues As Sprint Cuts 4,000 Jobs

The company also plans to eliminate more than 4,000 third-party distribution points and resellers and about 125 Sprint retail stores.

Faced with a continuing loss of subscribers, Sprint Nextel said Friday that it will eliminate 4,000 jobs and trim the number of its company stores and third-party distribution points.

Anticipating "continued downward pressure on subscriber trends, revenues, and profitability in 2008," the company said it plans to eliminate more than 4,000 third-party distribution points and resellers. About 125 Sprint retail stores are also slated for closure, the company said.

The company added that it lost nearly 700,000 monthly plan subscribers, although it picked up subscribers through its wholesale channels.

The cuts represented the most decisive action by the company since it hired new chief executive Dan Hesse last month. Hesse still faces some major issues including whether to move the firm's headquarters back to Kansas from suburban Washington, D.C., and whether to cut back or jettison its projected $5 billion investment in WiMax.

Sprint said the moves announced Friday will save between $700 million and $800 million by the end of the year; the company said it expects to complete the layoffs, which will include both management and non-management positions, in the first half of the year.

Sprint has been struggling ever since it acquired Nextel for $35 billion in December of 2004. It has had trouble keeping Nextel customers in the Sprint fold while spending heavily on expensive rollouts of CDMA2000 EV-DO and WiMax as many subscribers complained that customer service was deteriorating. The company laid off 5,000 employees last January.

In its announcement Friday, Sprint said churn among regular subscribers was 2.3%. Sprint noted that it was serving 53.8 million subscribers at the end of 2007. The subscribers break down as follows: 40.8 million regular subscribers, 4.1 million traditional pre-paid, 500,000 Boost Unlimited, 7.7 million wholesale, and 850,000 through affiliates.

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