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Embarq Embarks on Worker Cuts

Citing a confluence of rising competition, higher fuel costs, and a slumping economy, Embarq Corp. (NYSE: EQ) confirmed that it intends to sever between 500 and 700 workers from its network service group by year-end.

If Embarq lays off the higher end of that range, it will affect about 8 percent of a division that presently employs about 8,700. Embarq, which has close to 18,000 employees in all, also expects to reduce its contractor base by about 300 people.

Targeting "exempt" (or non-union) employees initially, Embarq is already seeking "volunteers to separate from the company," Embarq spokesman Charles Fleckenstein says. The company will extend the same voluntary deal to unionized employees "in the coming weeks."

If it can't find enough volunteers, Embarq will head into non-voluntary mode. Regardless, the company plans to complete the process by year-end. Non-union employees can expect to get two weeks of pay for every year they've been with the company. Severance packages for unionized workers will vary by market.

“To ensure the continued success of our enterprise, we are constantly evaluating the size and placement of our work force, including the way we staff and prioritize work,” Fleckenstein says. "This action helps rationalize the size of our work force relative to the size of our customer base.”

Embarq has not yet determined how much it will save from the cuts.

Embarq, like larger telcos, has suffered from subscriber voice line losses as customers churn to local cable operators or chuck their landline altogether and go wireless-only. (See Gorillas Endangered.) Embarq, unlike many of the bigger dogs, doesn’t have wireless in its service arsenal, but has remained hopeful that it can achieve some growth with wireless backhaul services. But cable rivals such as Cox Communications Inc. are already starting to make hay with backhaul strategies of their own.

Embarq ended the second quarter with 6.02 million access lines, down 170,000 lines from the year-ago quarter. The year-over-year rate of access line loss rose 7.8 percent in the second quarter. Embarq made up some ground with high-speed Internet (24,000 sub adds, giving it 1.36 million) and video services (24,000 sub adds, extending the total to 239,000), but that wasn't enough to make up for access line losses.

On the financial front, Embarq's second quarter revenues dipped by $56 million, but net income rose 17 percent, to $206 million, thanks in large part to $84 million in cost cuts. (See Embarq Cuts Its Way to Growth.

— Jeff Baumgartner, Site Editor, Cable Digital News

Stevery 12/5/2012 | 3:34:02 PM
re: Embarq Embarks on Worker Cuts volunteers to separate from the company

So who volunteers in these situations? Naturally the ones with other job prospects, leaving those with no job prospects behind.

I can think of only two reasons why managements use this tactic:

1. They are filled with faux-managers who can't make tough decisions.
2. They are devilishly clever, and realize that they will have anyone who's left by the balls.
midwest telco 12/5/2012 | 3:34:01 PM
re: Embarq Embarks on Worker Cuts No mention of letting go the managers that operated the deep packet inspection program that congress is now investigating
DCITDave 12/5/2012 | 3:33:59 PM
re: Embarq Embarks on Worker Cuts Yeah, they usually don't put that kind of thing in press releases. But , seriously, can you give us a name or two of some folks in the program who are now out on their ass?

ph

817-731-9228
nodak 12/5/2012 | 3:33:59 PM
re: Embarq Embarks on Worker Cuts I have volunteered twice for layoffs. The first time was right at the bust. The company I worked for had just been spun out with a lot of debt but very little capital. The company was headed for bankruptcy and I decided to take the package while there was still one. I was partly correct, the company went bankrupt 3 months later but they kept giving out the same package afterwards so I could have waited.

The second time was an equipment vendor shifting gears to become a telco. Management had no clue what it was trying to do or getting itself into, so I took a package on that one too. The nice thing there is I was able to work for another 3 mo before being let go and job hunt the entire time. Turned out I was partly right on that one, they did not know what they were doing, but I should have (and could have) waited another year.

In both cases, I think I was better off going on my terms instead of wondering if/when it was going to be me. The companies were better off by keeping people that wanted to stay with them (whether or not they could find something elsewhere).

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