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Headcount: Cutting the Fat (Really)Headcount: Cutting the Fat (Really)

SBC cuts; Axiowave cuts; Verizon cuts, then adds; something's amiss at Network Elements

November 8, 2004

4 Min Read
Headcount: Cutting the Fat (Really)

With all the makeovers happening at the nation's incumbent phone companies, Headcount wonders how soon it will be before the RBOCs end up as contestants on The Swan?

How alarming would it be if The Swan host Amanda Byram were at the next earnings conference call, offering hugs and kind words for sniffling executives? "I know it's tough to live up to what all the cable companies are doing," she might say. "But if you just shed some costs, add some services, and stop blaming all your troubles on the FCC, you'll do just fine."

Perhaps this column should just end on a surreal high, but, as format requires, we move on. Here are some telecom industry hirings and firings from the past few days:

  • Going Beyond the Pink Slip: SBC Communications Inc. (NYSE: SBC) whispered late last week that it may whack more than 10,000 jobs by the end of next year.

    No surprise there. Even its latest round of commercials for DSL service features the animated stars of The Incredibles instead of real people.

    Here's what SBC said on the subject late last week, via its SEC filings:

    Over the past 12 months, we have reduced our workforce by approximately 7,000, primarily through normal attrition. Based on a number of initiatives to improve efficiencies, we currently anticipate there will continue to be additional workforce reductions through attrition or involuntary programs that could exceed 10,000 by December 31, 2005.

    SBC employs 165,500 now, and one of those folks, as announced today, is Dan York, an IPTV specialist. Prior to joining SBC, York had his own media consultancy, The York Group, and, before that, he held the title of Senior Vice President, Programming & Development at In Demand Networks, a leading pay-per-view content company.

  • Hire Ground: Do SBC's layoffs contrast with what Verizon Communications Inc. (NYSE: VZ) is doing by hiring an extra 3,000 to 5,000 staff by the end of 2005 for its FTTP (fiber to the premises) buildout?

    Not really. That carrier has been able to pay for those extra resources by tightening up in other areas (see Verizon Expands FTTP Plan). Between September 30, 2003, and September 30, 2004, the carrier cut 11,700 people from its payroll -- about 5.3 percent of its workforce, according to SEC filings.

  • Core Pouting: Routing startup Axiowave Networks Inc. has cut 84 percent of its staff. The company says it is "reducing the number of company employees from 156 to 25, primarily across its sales, marketing, and engineering operations."

    The cuts were needed to save cash while it hunts for more funding. According to a statement on its Website, "Axiowave will continue to support its customers and existing product line during this restructuring," and more information will be available on the company's fate in the next 30 days.

  • Marco! Polo!: Headcount is remiss that it didn't observe when Marco Pagani, former president of Nortel Networks Ltd.'s Optical Ethernet and Storage Solutions group, became chairman of Nimcat Networks, early this year. We noted his departure from Nortel in March and that he was missed at Nortel's Carrier Inform 2004 User Group Conference back in May, but didn't discover he'd landed at Nimcat until just recently (see Headcount: Man-Eating Holiday and Nortel Bigwigs Miss User Conference). Our bad. Nimcat, by the way, is building a peer-to-peer call processing solution that's built into VOIP telephones and eliminates the need for central office equipment. Perhaps someday he'll host a facilities tour of his new digs much as he did so graciously before Nortel ran into a rough patch of securities violations (see On the Job – With Mumford & Pals ).

  • Can't Work Elements: Employees of Network Elements Inc., a supplier of 10-Gbit/s optical networking modules, are in stasis while executives negotiate to sell the company. CEO Bruce Murdock tells Headcount "a significant number" of the 60 employees are on unpaid furlough during the sale process, which began "some months ago" when Network Elements received an unsolicited buyout offer. The company cast a net for other buyers, and expenses are being kept at a minimum until a deal closes -- which Murdock says could happen this week. Murdock says he's only considering offers that would include the employees.

    By way of background, Network Elements was founded in 1998 and has raised more than $100 million in funding.

    We wrap up, as usual, with a summary of other industry appointments and disappointments from the past few days:

    • Work Poll: Offshoring Gathers Steam

    • Union Slams AT&T Job Cuts

    • Sprint Cuts Its Business Unit

    • Net.com Reports Happy Q2 (Sort of)

    • JDSU Hires Former Intel VP

    • Force10 Adds Sales Exec

    • Former Mahi CEO Joins USVP

    • Finisar Appoints Senior VP

    • Optical Solutions Adds VP

    • General Bandwidth Adds Some S&M

    • Spirent Remembers David Gellerman

    Please keep those news tips coming to [email protected].

    — Phil Harvey, News Editor, Light Reading

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