Sprint Nextel, after a huge loss during the first three quarters of 2008, will lay off about 8,000 employees as part of an effort to cut annual costs by US$1.2 billion, the company announced Monday.
The layoffs, affecting "all levels" of the company, are expected to be completed by the end of March, Sprint Nextel said in a news release. The company posted a net loss of US$326 million in the third quarter of 2008 and a net loss of nearly $1.2 billion for the first three quarters of 2008. The company, due to release fourth-quarter numbers on Feb. 19, lost 3.5 million mobile phone customers between the third quarter of 2007 and the third quarter of 2008.
Sprint has 56,000 employees. Included in the 8,000 positions are about 850 workers expected to be eliminated in a voluntary separation plan started in late 2008. The cost of the layoffs us expected to be more than $300 million in the first quarter of this year, Sprint Nextel said.
"Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment," Sprint CEO Dan Hesse said in a statement. "We continue to improve the customer experience and these improvements are reflected in much higher levels of satisfaction in customer surveys and in independent performance tests. Our commitment to quality will not change."
Sprint, based in Overland Park, Kansas, will attempt to lay off a greater proportion of employees in areas that don't interact with customers, it said.
In other efforts to improve its balance sheet, Sprint repaid $2 billion in debt in the second half of 2008, and renegotiated its credit terms. At the end of the third quarter 2008, the company had a cash balance of $4.1 billion.
Cost reductions also include a suspension of matching funds to employee 401(k) accounts in 2009, an extension of 2008 salary freezes, and a suspension of its tuition reimbursement program during 2009.