MCI WorldCom plans job cuts
The country's No. 2 long distance phone company is likely to slash jobs company-wide in an effort to bring down costs, a spokesman says.
An MCI WorldCom spokesman confirmed that cuts were imminent--however, he declined to give specific numbers. He could not confirm a Wall Street Journal Europe report that said the Mississippi-based company will slash as many as 3,750 jobs, or 5 percent of its workforce, in a cost-cutting measure to be announced as early as this week.
But a source close to the company confirmed that 3,750 MCI WorldCom jobs will be cut.
"I can't comment on those figures," said spokesman Mark Weeks in London. "The company has stated that it will be hitting certain sales, general, and administrative costs and that it will have to remove a few people."
MCI WorldCom was created in September when WorldCom acquired MCI Communications in a $37 billion deal. The combined companies employ about 75,000 people.
"When you have two organizations that large coming together there is going to be some synergies and some overlap," said Phil Wohl, a telecommunications analyst at S&P Equity Group. "[By reducing the workforce] they will achieve some cost saving because it just doesn't make sense to have two people doing the same job.
"It's a natural progression," Wohl added.
The aim of the cuts is to reduce duplication in the combined company and will affect some jobs outside the United States, Weeks said. At the same time, other jobs will be added in the company's international business that will more than compensate for the lost positions.
"It is across the company, this reduction in force," Weeks said. "Even on the international front there is some duplication, but net effect through next year is we expect to see an increase in the international workforce."
AT&T, British Telecom, Cable & Wireless, Sprint, and MCI WorldCom all are jockeying for better positions in the global telecommunications market.
"Basically they are adding people in areas where they are growing faster and need the people; not to make up for the cuts," said Wohl.
Shares of MCI WorldCom jumped higher in early trading, rising 1.75 percent or 1.09 points to 63.75. The stock has traded as high as 64.13 and low as 28 during the past 52 weeks.
Analysts agreed that MCI WorldCom had become excessively bloated and was incurring some unnecessary expenses before the merger.
"A lot of these telecommunications companies had gotten bloated. It happened to AT&T before [the new chief executive C. Michael Armstrong] got in there," said Wohl. "Some of these companies get too big, they have large staffs and you have to streamline them--especially when two similar companies come together."
Weeks didn't provide any figures on the exact number of jobs to be cut or added.
Bloomberg contributed to this report.