Sprint Nextel Announces 8,000 Redundancies
Published on: 25th Jan 2009
Note -- this news article is more than a year old.
Sprint Nextel has announced plans to cut some 8,000 jobs in an effort to shave USD1.2 billion a year in costs from the troubled firm. The job cuts are expected to take place over the next two months, and will affect all levels of the company.
The reduction total includes approximately 850 positions expected to be eliminated under a voluntary separation plan started late last year. The company expects to recognize a charge in excess of $300 million in the first quarter of 2009 for severance and related costs associated with the reduction.
"Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment," said Sprint CEO Dan Hesse.
The labor cost reductions are the latest action in the company's efforts to make its cost structure more competitive in the industry and to remain financially secure in a challenging economic environment. Sprint repaid $2 billion in debt in the second half of 2008, and renegotiated its credit facility terms with the expectation of sufficient liquidity to pay debt coming due during the next two years. At the end of the third quarter 2008, the company had a cash balance of $4.1 billion, and said that it had expected to continue to generate Free Cash Flow in the fourth quarter.
Company cost reductions also include a decision to suspend the 401(k) match for 2009, to extend a 2008 suspension of annual salary increases through 2009, and to suspend its tuition reimbursement program for 2009.
The company will release its fourth quarter 2008 financial results on Thursday, Feb. 19, which is earlier than previously announced.