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To: Dealer who wrote (45843)	1/5/2002 4:19:41 AM
From: Dealer	Read Replies (1) \| Respond to of 65232

01/04 19:16--AT&T to Cut 5,000 Jobs This Year; Have $1 Bln Cost (Update5) By Dana Cimilluca New York, Jan. 4 (Bloomberg) -- AT&T Corp., the largest U.S. long-distance telephone company, had $1 billion in pretax costs last quarter mainly for job cuts and will eliminate 5,000 positions this year as sales shrink. The latest cuts, which are in addition to 5,100 last year, affect 6 percent of the phone-business workforce. Jobs are being shed at the business and consumer phone units and the corporate level, AT&T said, with managers accounting for more than half. Chief Executive Officer C. Michael Armstrong, who last month agreed to sell AT&T's cable business to Comcast Corp. for $72 billion, is facing lower prices and more competition in long- distance. Sales at AT&T Business fell 4.7 percent in the third quarter, and were forecast to fall by more last quarter. AT&T has said consumer sales will fall as much as 30 percent in 2002. ``AT&T is clearly in conservation mode, just like the rest of the industry,'' said Richard Klugman, a telecommunications analyst at Jefferies Group Inc. who has a ``hold'' rating on AT&T shares and doesn't own the stock. ``The long-distance business is slowing and they need to shrink their costs as their revenue shrinks.'' Sales at the company's consumer long-distance business fell 18 percent to $3.8 billion in the third quarter. AT&T and other long-distance sellers are losing customers to local-phone carriers such as Verizon Communications Inc. entering the market. They are also being hurt by competition from wireless calls and e-mail. Shares of New York-based AT&T fell 27 cents, or 1.5 percent, to $18.37. They have risen 13 percent in the past year after plunging 66 percent in 2000. Cutting Back AT&T has 80,000 employees in its phone operation. The company's cable business, the biggest in the U.S., has 40,000 workers after cutting 13,000 jobs last year. In October, AT&T said it would have fourth-quarter costs for restructuring the business-services unit. The company said then that wouldn't include more than $350 million in cash. That hasn't changed, spokeswoman Eileen Connolly said, without being specific. The sale of the cable unit to Comcast, to be completed by the end of the year, will leave AT&T looking much like it did when Armstrong took the helm in 1997. The CEO made more than $100 billion in cable acquisitions, part of a plan to offer services including Internet access, calling and TV through one wire. The plan was abandoned when a breakup of AT&T was announced in October 2000 amid mounting debt and a falling stock price. Takeover Candidate? Some analysts have said the separation of cable, and the planned shift of $20 billion in debt to Comcast's balance sheet, may make AT&T a takeover candidate. Armstrong didn't rule out the possibility in an interview two weeks ago. AT&T ``can control its destiny,'' he said then. ``If the best outcome for its destiny is to go buy something or to merge with something or to be bought by something, it now has the strength to determine that.'' The fourth-quarter pretax expense of $1 billion, for cutting jobs this year and last, adds to costs of $5.3 billion recorded in the third quarter for scrapping AT&T's Concert phone venture with British Telecommunications Plc. AT&T also had at least $4 billion in pretax expenses related to assets that lost value over the three quarters preceding the period ended in September. Analysts polled by Thomson Financial/First Call expected AT&T to have a profit of 4 cents a share in the fourth quarter. The company had a loss of 45 cents a share in the year-earlier quarter.