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AT&T Businesses Communications The Almighty Buck

AT&T Preps For New Layoffs Despite Billions In Tax Breaks and Regulatory Favors (vice.com) 180

Posted by BeauHD from the surprise-surprise dept.
An anonymous reader quotes a report from Motherboard: AT&T is preparing for yet another significant round of layoffs according to internal documents obtained by Motherboard. The staff reductions come despite billions in tax breaks and regulatory favors AT&T promised would dramatically boost both investment and job creation. A source at AT&T who asked to remain anonymous because they were not authorized to speak publicly told Motherboard that company leadership is planning what it's calling a "geographic rationalization" and employment "surplus" reduction that will consolidate some aspects of AT&T operations in 10 major operational hubs in New York, California, Texas, New Jersey, Washington State, Colorado, Georgia, Illinois, Missouri, and Washington, DC. A spokesperson for AT&T confirmed to Motherboard that it is planning to "adjust" its workforce.

While AT&T has yet to come up with a final, formal internal tally for this new round of looming layoffs, AT&T employees worry the staff reductions could prove to be significant, especially outside of these core areas. Managers are being briefed on the plans now, though AT&T isn't expected to formally announce the specifics until they're finalized later this month. The staff reductions were first announced in an internal memo sent to managers last Friday by Jeff McElfresh, President, Technology & Operations at AT&T. This news comes in the wake of AT&T receiving a $20 billion windfall last quarter courtesy of the Trump administration tax breaks. That's in addition to the friendlier environment AT&T finds itself in as a result of the Trump administration's assault on consumer protections ranging from net neutrality to broadband privacy guidelines. "To win in this new world, we must continue to lower costs and keep getting faster, leaner, and more agile," McElfresh told employees. "This includes reductions in our organization, and others across the company, which will begin later this month and take place over several months."
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AT&T Preps For New Layoffs Despite Billions In Tax Breaks and Regulatory Favors More

AT&T Preps For New Layoffs Despite Billions In Tax Breaks and Regulatory Favors

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  • I don't think we can take much more of this winning.

  • Mammoth Debt... (Score:5, Informative)

    by Darkling-MHCN ( 222524 ) on Tuesday January 08, 2019 @11:00PM (#57928882)

    The poster fails to mention the $180B debt that at & t currently has and that as interest rates rise there's a substantial risk that the company could go bankrupt and need a bail out. They've already publicly committed to reducing their debt load by $20B in 2019 [cnbc.com]. They'll probably need to do a lot more to survive the next big credit crunch.

    • Re:Mammoth Debt... (Score:5, Insightful)

      by Gravis Zero ( 934156 ) on Tuesday January 08, 2019 @11:03PM (#57928896)

      Bail out? Nah, the country would be way better off if we just auctioned off their assets to smaller companies would would take their place instead of subsidizing their bad behavior.

      • Re:Mammoth Debt... (Score:5, Funny)

        by Waffle Iron ( 339739 ) on Tuesday January 08, 2019 @11:34PM (#57928994)

        Well, AT&T was already subjected to that fate, but then the parts seem to have reassembled themselves like the liquid metal robot from Terminator 2.

        • Re: Mammoth Debt... (Score:2, Insightful)

          by Anonymous Coward

          The T1000 has nothing on the monopolized market convergence lead to by capitalism, then stagnated by cronyism.

        • Re:Mammoth Debt... (Score:5, Informative)

          by ShanghaiBill ( 739463 ) on Wednesday January 09, 2019 @01:03AM (#57929188)

          Well, AT&T was already subjected to that fate

          The AT&T that was broken up in 1984 was a DIFFERENT COMPANY.

          SBC bought the rights to the AT&T brand and logo in 2005.

          The heart of the original AT&T became Lucent Technologies, and then later Alcatel-Lucent, and I believe they are now part of Nokia.

          • Re:Mammoth Debt... (Score:5, Interesting)

            by Waffle Iron ( 339739 ) on Wednesday January 09, 2019 @01:39AM (#57929276)

            Actually, it's far more complicated than you represent. Lucent was only one blob spit out from what remained of the core post-breakup AT&T telecommunications company, which itself executed many other acquisitions and spinoffs before SBC bought them (the whole company, not just their name). See: https://en.wikipedia.org/wiki/... [wikipedia.org]

          • Lucent is best mapped to the legacy Western Electric (manufacturing arm), AT&T kept the legacy landline LD service, Bell Labs and the quickly-defunct Computer Systems Group. The seven Regional Operating Companies went through M&A in the 90s/00s leaving Southwest Bell/SBC swallowing up Pac Bell, Ameritech and finally Bellsouth, picking up the rump AT&T operation in the process and taking Mother's name. Nynex & Bell Atlantic picked up the remnants of MCI Worldcom & became Verizon. Mount

          • I've personally worked on tracing the stock when it was broken up to today, for cost basis reasons.
            I can tell you that some of the same people and assets came right back together again. It was like a vampire that was nearly dead but came back to life.

        • Well, AT&T was already subjected to that fate, but then the parts seem to have reassembled themselves like the liquid metal robot from Terminator 2.

          I was thinking more like 80s cartoon robots :)

        • AT&T has 250,000 employees. If they fail:

          • The bankruptcy filing will cancel common stock and shield them from debts;
          • Many creditors will get nothing, or take a loss;
          • The big preferred-stock shareholders may be legally-entitled to a pay-out;
          • Executives walk off with whatever golden parachutes and existing compensation they've already received;
          • The employees will become unemployed.

          The last two aren't interchangeable: executive mega-bonuses of a hundred million dollars divide up to around $400 per employee.

    • Debt debt debt (Score:5, Interesting)

      by Anonymous Coward on Tuesday January 08, 2019 @11:48PM (#57929044)

      Second time in a month that /. fails to think finances when it comes to corporate layoffs.

      - AT&T and other large companies borrowed large sums at low interest rates over the last few years for stock buybacks.
      - 2019 is a year with ~20 billion debt due for AT&T and little hope of refinancing it at rates anywhere near the current rate paid.
      - AT&T is rated just above junk status and a balance sheet slip would put it into junk status and drastically raise the cost to finance dept.
      - And many bond covenants have stipulations that the principle is paid faster if the company goes from investment grade rating to junk rating.

      It's easy to look at via FINRA how the company debt vs maturity is trading versus risk free US Treasury issues of similar maturity and coupon rates. Trading at rates well above treasuries is a sign that the bond market thinks the company balance sheet is in poor standing.

      A credit event like Long Term Capital Management, Lehman Brothers, etc would raise borrowing costs to 9% or higher per year and make it nearly impossible for AT&T to refinance its outstanding debt. Thus bankruptcy and likely like GM get bailed out by the US taxpayer with the nice for AT&T benefit of shifting its unfunded pension liabilities to the government run PBGC.

      The credit event would sink stocks and nearly all bonds except for US Treasury bonds; slow the economy, hurt free cash flow, .....

      • Re: (Score:2)

        by Anonymous Coward

        ... fails to think finances ...

        No, we're thinking that management should be dismissed too. It's unfair to sacrifice the front line so managers can repeat their mistakes.

      • Re:Debt debt debt (Score:5, Insightful)

        by dryeo ( 100693 ) on Wednesday January 09, 2019 @02:40AM (#57929394)

        Perhaps they shouldn't have borrowed money for stock buybacks. Wasn't that illegal not long ago?

      • Their landline division has state granted monopolies in most of the USA. They legally have no landline competition within these areas, and they are losing most of these customers to death by old age.

           

      • So ban stock buy backs (Score:4, Interesting)

        by rsilvergun ( 571051 ) on Wednesday January 09, 2019 @10:16AM (#57930638)
        they're primarily used to boost the price so that the CEOs get a big paycheck since their bonuses are tied to (and often paid in) stock. This is _exactly_ why stock buy backs were illegal (until Reagan made them legal).

        Folks like Liz Warren and Bernie Sanders would be happy to do this if we'd give them more left wing colleges in congress. But these are "Job killing regulations" right? Except that what's really killing jobs is that we let the ruling class gamble with all the money in the country and when they go bust they come out smelling like roses.

        I don't think we can let them go bust, either. We're in a hostage situation and always will be without government oversight. We need new rules to protect jobs. To wit:

        1. Ban Stock Buy backs.
        2. Require public companies to have 50% employee representation on their board of directors or they don't get a charter (and the protections therein).
        3. Bring back Glass-Stegal.
        4. Undo Bush Jr's commodities market deregulation. Make folks who buy commodities take possession of them so they can't skim 10% off our food supply.

        There's lots more. Liz Warren has a fairly comprehensive anti-corruption law she wants to enact.

    • Re:Mammoth Debt... (Score:5, Interesting)

      by imperious_rex ( 845595 ) on Wednesday January 09, 2019 @01:02AM (#57929184)
      I agree. I checked their balance sheet for 2017 on Yahoo Finance (ticker symbol "T") and their current ratio is almost 1:1 (current assets to current liabilities). That's not good. A reasonably healthy company should have a current ratio of 2:1 or better. Somebody at AT&T has been abusing the company credit card. Too bad it's the rank and file employees who will suffer the pain of managment's ineptitude.

  • They put the "down" in trickle-down.

  • Manpower is never planned on tax breaks (Score:4, Insightful)

    by Elfich47 ( 703900 ) on Tuesday January 08, 2019 @11:02PM (#57928892)
    Companies never plan their manpower needs based on tax breaks and incentives. Companies look at the work that needs to get done, the money they have, they billing they expect and from there decide how much manpower they need. These companies are not going to hire people to sit on their thumbs doing nothing. So if they have to much manpower, they layoff. Government tax breaks are not going to affect this process.

    • Companies look at the work that needs to get done, the money they have, they billing they expect and from there decide how much manpower they need. These companies are not going to hire people to sit on their thumbs doing nothing. So if they have to much manpower, they layoff.

      I just have to ask if you were able to keep a straight face when you wrote this or did you just leave college?

      Somewhere along the chain of command, usually multiple levels, a managers power and/or renumeration depends on the number of projects or people that report to them. This leads to a survival of the fittest environment within the company with each manager looking to scoop up the next upcoming project along with the associated resources. Or, as in one company I was contracting at, where the number of p

    • Actually, gov tax breaks CAN increase hiring. However, if you remember the write-ups on it, The GOP gave bigger tax breaks for OFF-SHORE work, not on-shore. Want jobs to remain in America? THen we need to do the same thing as other nations and apply taxes preferentially to local work.

    • Except none of what is going on here has anything to do with "enough people". The layoffs are monetarily motivated. The corp needs more money to finance its debt and will get it by laying people off. Whether or not those people were needed for anything is not of concern. If they were needed, the corp will "suffer" until it has enough money to hire people again. If they were not needed, then BONUS! They also got rid of dead weight... but again, that is not why any of this occurring.

  • Good. There are WAY too many people involved in this company that don't know how to operate in customer service. I'm convinced that no one in the company actually knows anyone else in the company. This exists on multiple levels, consumer/cell/business/fiber. Flashlights wouldn't help them finding their way through an email chain. It's embarrassing that one of the biggest companies in the world can't operate efficiently, OR provide their customers with a quality product, OR provide their customers with addi
  • In particular, it gave more breaks for offshore operations, than on-shore. Yeah, Trump gave breaks on-shore, but bigger ones off.
    So, this was expected.

  • The staff reductions come despite billions in tax breaks and regulatory favors AT&T promised would dramatically boost both investment and job creation.

    I guess my area will never get U-verse. It's been over 10 years and I keep receiving advertisements for their U-verse service.

    But the best service I can get is their DSL at 6 Mbps for $40/mo.

  • Nice work by our Executive Capital Concentration and RIF-Bitch Realization Team. Bonuses for everyone. And remember to show that dour "gloom-and-doom" face for the media.
  • The everlasting, yet to discover virus residing in human brains causing the never ending urge to collect $$'s or other considered wealth and power items - long list here omitted - by creating imaginary voids of various kinds to urgently fill without actual need and then to create more voids since it was futile as always requires probably extremely consequent and strong characters - is this Miller-something a type like that - anyway, time to hit the sack!

  • Any excuse to maximize their bottom line!

    Stupid cocksuckers...

  • A disappointing feature is the decision to concentrate there rather than to focus away from the overly expensive areas of NY and DC. This would help spread prosperity to other parts of the country.

  • I hate to say it, because people are hurt, but AT&T is a mess. It has become so big that it is rotting out from the inside. It needs to shed staff and sell off entire divisions. It is so big that it can't coordinate it's own actions. Hell, it can't even provide its own people with accurate internal phone directories. It's a phone company that doesn't know its own numbers, has 3 separate and uncoordinated TV services competing with each other, keeps gobbling up other bloated and dying companies outs
    • Perhaps but the layoffs will do nothing to correct this. The layoffs are meant to reduce costs. By reducing costs AT&T can funnel more money to investors, as opposed to back into the company to improve operations. So no, this move is not meant to improve the business.
      • No, it's not. But that doesn't change the fact that the company is far too big and bureaucratic to operate effectively. I have a feeling though that they won't be shedding the right employees, more likely it's the ones they actually need being discarded.

  • What AT&T is ( likely ) doing (Score:5, Interesting)

    by nehumanuscrede ( 624750 ) on Wednesday January 09, 2019 @10:06AM (#57930562)

    This entire process is about the stupid amount of debt AT&T is now holding due to the recent buying spree it has been on as of late.

    Here's a passage that isn't in the original story:

    " It's critical for us to bring employees together to increase the pace of innovation and further develop the right skills in a more open, flexible and efficient work environment. Therefore, our collaboration zones and hub cities become even more integral. "

    I read that as the whole " Office 2.0 " bullshit where your workspace is shared with everyone else. They like to claim " collaboration " but, in reality, they're just being cheap.

    " further develop the right skills " is downright laughable as AT&T considers training an expense vs an investment. This is why you have the service you do because NO ONE is trained in how to do their job anymore so everyone basically wings it as best they can. Corporate will deny it, but ask any normal employee the last time they saw any standard / formal training* in regards to how to do their job and they will likely tell you Ed Whittacre was still the CEO.

    *Some of you will question why this is needed, but remember new hardware arrives all the time. It's akin to being fluent in Cisco for years and they plop a Juniper down in front of you and say " make it work, we're shifting everything new over to Juniper ". When you put critical or customer traffic on this, it's rather important to know what you're doing. ( In my opinion anyway )

    Another thing the original story is unaware of is the fact that AT&T is looking at all the real estate it owns ( and it's quite a bit ) to determine if any given building can be shut down and sold off. Basically, if the building doesn't contain enough critical infrastructure for serving the area it resides within, there's a good chance it's on the list. If it contains just a call center, there's a good chance it's already been sold. Their real estate is worth quite a bit and is probably the most efficient method of raising capitol needed to pay down that debt.

    I say enough because there are several buildings that are already on the list to be vacated that DO contain systems that have to be moved before it can be sold. These buildings are basically regional locations where network connections across the State consolidate at the distribution layer. All of these connections have to be moved onto new architecture ( in progress ) and each location has a desired timeline for completion. We're talking hundreds and possibly thousands of sites that are fed from these locations that have to be moved. It will take a considerable amount of time ( several years ), money and people to complete.

    The problem is, if they continue to slash headcount, they're not going to have enough people left to do the work required to meet those deadlines. As it stands today, with the current headcount, those deadlines are already in trouble. Telling them this tends to fall on deaf ears. Guess they'll figure it out when the deadlines come and go.

    What tends to irk me most is:

    They keep buying shit with money they don't have. ( DirecTv / Time Warner )
    The money AT&T WASTED on the failed T-Mobile merger was ~$5B
    The money AT&T wastes on stupid shit like " Stadium Naming Rights " and the like
    An executives yearly bonus is more than a non-executive type makes their entire LIFE

    Yet, laying people off is their go to answer for saving money :|

  • Trump's economy.

  • Aragorn: Show them no mercy, for you shall receive none.

    Corporations might promise the moon in exchange for tax breaks, but they'll never deliver: they are going to rationalize no matter what. If they convince you otherwise, it's because your cloudy Palantir has not yet detected the enemy's secret plan.

    Or, you're a politician and you're embedded deep in the corporate kimono already, and you're just pretending to have a myopic Palantir, but in truth cash-on-the-barrel is 20-20.

  • Why are we giving huge tax breaks to corporations only for them to turn around and lay off people? The answer is a sarcastic, "Because corporations ...." More corporate wealthcare I guess.

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