AT&T Freezes Pay
AT&T Corp. (NYSE: T) is off to a chilly start in 2004 -- it's freezing pay.
In an effort to keep a lid on costs, the company has suspended pay raises until April 2005 for roughly half its workforce, or 36,000 management employees. They had been scheduled to received raises in April 2004.
AT&T CEO Dave Dorman announced the decision in a company-wide email last week. Bonuses scheduled for "high-achievers" in March will still be awarded, the company said.
"It's no secret that the telecom industry has been going through hard times, and this is a way for us to help maintain costs," says Sue Fleming, an AT&T press officer.
Analysts say the nation's largest long-distance carrier is preparing to face MCI's (Nasdaq: WCOEQ, MCWEQ) reemergence from Chapter 11, free of debt, in February (see MCI Back In Business). The two carriers have been at each other throats since the summer when AT&T accused MCI of fraud. At the time, insiders were convinced AT&T was doing its utmost to prevent MCI's comeback (see AT&T Slaps Suit on MCI, Onvoy, Were MCI Engineers In On It Too?, AT&T Replies to MCI's Reply, MCI Hits Back at AT&T, AT&T Slaps Suit on MCI, Onvoy).
For the third quarter, AT&T's revenues dropped to $8.6 billion from $9.4 billion a year ago. Sales to residential customers fell 15.8 percent, while sales to corporate customers fell 6.2 percent (see AT&T Posts Q3 Earnings).
As part of its cost-cutting effort, AT&T announced in early December that it would be chopping 12 percent of its staff, or about 8,500 jobs -- 2 percent more than previously announced (see Company Makeover).
— Jo Maitland, Senior Editor, Boardwatch