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AT & T is among the largest providers of telephone services providers in the United States of America and across the globe (Kleinfield, 1981). In late 2008, AT & T announced that, as a result of the economic/financial pressure being felt across the world, that it would be cutting 12,000 jobs. This was termed as a “changing business mix and a more streamlined organizational structure” by the company (At & T Inc., 2007).
As mentioned, due to the tough economic conditions that were being experienced the world over in the year 2008 and partly through 2009, the company decided to lay off close to 4% of its workforce (At & T Inc., 2007). The company had announced that it would incur a cost of close to 600 million dollars for this exercise. What was surprising, however, is the fact that during this period, the company was not making losses as it seemed. For instance, the company reported a net income of $3.23 billion, up from $3.06 billion in the third quarter of 2007. As a result, the company revenue grew from $30.1 billion to $31.3 billion (At & T Inc., 2007).
As exposed by the reasons mentioned above, the corporation announced that it will spend a total amount close to$11 billion in 2009 out of a total capital spending plan estimated to be between $17 billion and $18 billion to increase and improve both its wireline and wireless broadband networks. AT & T had formerly devoted about $1 billion of its capex budget to global network initiatives. It was, however, expected that the planned cost-cutting measures of 2009 would lead to the creation of about 3000 employment opportunities (At & T Inc., 2007).
AT & T Company has improved on its financial position due to the layoffs. It is first off imperative to note that AT & T made a compensation attempt (an attempt to put some of its employees in their initial position) by adding employees in some areas of the company that was “understaffed” (At & T Inc., 2007). Sections such as wireless, video, and broadband required more employees to meet the ever-increasing customer demand.
In 2009 (after the lay-offs) the company’s capital expenditure reduced from the 2008 levels. The company made major improvements/growth in the year 2010 also. AT&T announced a startling $2 billion boost in 2010 wireless capital spending at its fourth quarter and year-end earnings call on January 28. This is an important and very substantial spending increase.
What should be understood is that the company was not facing any financial itch as reported by many media houses. The company was merely taking some precautionary measures that would see to the avoidance of one major financial meltdown.
AT & T however, managed to secure and increase its financial positions in a period when many companies were facing an economic crisis. Although many people lost their jobs, the company managed to secure its financial position.
References
“AT&T Inc”.(2007). The Center For Responsive Politics. Web.
Kleinfield, S. (1981). The biggest company on earth: a profile of AT&T. New York: Holt, Rinehart, and Winston.
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