AT&T slashes 12,000 jobs, shifts to wireless

AT&T today announced one of the larger job cuts in the midst of the US recession and said it would drop 12,000 employees, or about 4 percent of its total worker base. The effort is attributed both to the poor economy as well as to a "changing business mix" that has left its traditional landline service in decline. Much of that business is shifting towards cellphones and other wireless services, the company says. It also plans to reduce its overall capital spending at the same time but won't have details until January.

Accordingly, the firm also says that some of the job losses will be offset by new hirings in areas that are growing, such as its cellular division as well as its Internet access and video services, such as U-verse. The telecom giant is nonetheless making the cuts following a 4,600-person cut targeted at its management and after it had announced a general reduction in headcount by 10,000 workers over three years.

The drops follow a quarter in which AT&T had the largest number of monthly phone subscribers in its history but at the expense of its profit margins, as the launch of the iPhone 3G squeezed profit margins well below what would have otherwise been expected. AT&T is known to be heavily subsidizing the up-front cost of the Apple phones with hopes that the higher monthly revenue per person for data use will more than offset the difference.