AT&T to Cut 12,000 Jobs, Slash Capital Spending

U.S. phone company AT&T said Thursday it would eliminate 12,000 jobs, about 4 percent of its workforce, as it joins a raft of corporations trying to slash costs in the face of the economic downturn.

Toby Jorrin / AP

AT&T will cut the jobs over the remainder of 2008 and 2009, and take a charge of about $600 million in this year's fourth quarter for severance.

The carrier plans to cut its 2009 capital spending from this year's levels, though actual spending plans have not yet been finalized. AT&T said it would provide details on its capital spending in late January.

Shares of AT&T were down 2.5 percent in pre-market trade following news of the job cuts, which the company attributed to "economic pressures, a changing business mix and a more streamlined organizational structure."

The stock has dropped by about 30 percent so far this year, as the company has looked for ways to make up for the rapid decline in traditional wireline customers. To help, it has increasingly turned to wireless and high-speed Internet services.

• Get Real-Time Quotes for AT&T

Indeed, its iPhone has given the carrier a big boost in subscribers, although those sales have hurt profit margins as AT&T offers subsidies on the phone.

In a statement on Thursday, AT&T said that while it is cutting its overall workforce, it is adding jobs in areas such as wireless, video and broadband.

(AT&T announced it would cut 12,000 jobs. Watch the accompanying video for more...)

AT&T is just one of several companies announcing job cuts today. Viacom said it would eliminate 7 percent of its workforce, or 850 jobs. Swiss bank Credit Suisse said was cutting 11 percent of its workforce, or 5,300 jobs, while Adobe Systems announced on Wednesday that it would eliminate 8 percent of its staff, or 600 jobs.

Copyright 2008 Reuters. Click for restrictions.