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AT&T Preps For New Layoffs Despite Billions In Tax Breaks and Regulatory Favors (vice.com)
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."
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."
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. They'll probably need to do a lot more to survive the next big credit crunch.
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, .....
Melania Trump, 1600 Pennsylvania Ave., Washington DC, 37188
You are welcome on my lawn.
Actually, "Tax Reform" under Trump did manage to close loopholes that allowed teachers to write off school supplies. For opponents of "Big Teach" this could be considered a big win.
The problem is that power will not let you complain about this. You will be a radical, a communist, a know-nothing idiot who wants us back in the stone age or to give all your wealth to you, you greedy bastard....
The rhetoric is force fed to society. Same reason why society is "too stupid" to stop falling for religious woo (see the new agism bollocks, replacing christianity for those who find society able to let them stop falling for *christianity*, just not for woo "explanations").
It isn't that society is TOO STUPID, it's that the power structure is forcing a propaganda war to stop you complaining.
So you will blame the left, the right, the immigrants, the managers, the patriarchy, the SJWs, the blacks, the chinese, ANYONE but those who are running the propaganda because in a capitalist society money means power, so you cannot fight those with money, you cannot BLAME those with money. So you have to blame it on some other identifiable group. ANY group.
And, having misdiagnosed the problem, any fixes done to that problem will not fix the actual issue, and so it spirals out of control and we "fall for it again".
Umm, no it didn't, The Affordable Care Act required people to PURCHASE HEALTH INSURANCE. People still go bankrupt due to medical expenses. People still do not have access to affordable healthcare. Even with health insurance plans (which most of them have high deductibles) people still do not go to the doctor because they cannot afford it.
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 :|