AT&T Wireless to lay off workers

The No. 2 U.S. wireless telephone company in revenue says it will cut a low single-digit percentage of jobs as it works to improve its profit margins and consolidate operations.

AT&T Wireless, the second-largest U.S. wireless telephone company in revenue, on Wednesday said it plans to cut a low single-digit percentage of jobs as it works to improve its profit margins and consolidate its operations into two locations.

"We want to get to industry-leading margins," said Mark Siegel, spokesman for the Redmond, Washington-based company. "This effort is primarily about re-engineering the business. We expect the impact to be in the low single digits." That could be about 3 percent, or 1,000 jobs in 2003 from its work force of about 31,000 at the beginning of the year.

AT&T Wireless cut 2,000 jobs in 2002 as it eliminated its fixed wireless business and cut employees from acquired company Telecorp. The job cuts, first reported in The Wall Street Journal, are just the latest in the wireless industry, which is struggling to boost profits amid intense competition and slowing customer growth.

Other operators, including Cingular Wireless and Sprint PCS, have also cut jobs this year. Cingular is a joint venture between SBC Communications and BellSouth.

Siegel said the AT&T Wireless cuts were part of its effort to concentrate its operations into two locations--its Redmond headquarters and the New York and New Jersey area. As positions are eliminated in other areas, the company expects to refill many of those positions in the two locations, he said.

"The net effect on the work force, we think, will be very small," he said. Siegel declined to confirm whether the company was planning to move between 1,000 and 2,000 information technology positions overseas, but he said, "We're certainly open to approaches that will help us get to industry-leading margins." Since last year, AT&T Wireless has focused particularly on increasing its margins.

In the first-quarter, it posted a profit of $135 million compared with a loss of $178 million a year ago, easily beating analysts' expectations, as revenue rose 9.3 percent. Its operating cash flow, or earnings before interest, taxes, depreciation and amortization (EBITDA) surged more than 35 percent to $1.1 billion. AT&T Wireless expects this year to post free cash flow, or cash flow before financing activities.

Shares of AT&T Wireless fell 17 cents, or 2 percent, at $8.34 on the New York Stock Exchange in midday trading.

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