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Bank of America to Cut Another 4,500 Jobs
CHARLOTTE, N.C.(Oct,. 7)- Bank of America Corp. Said Thursday it will cut about 4,500 jobs, or about 2.5 percent of its work force, beginning this month as a result of its merger with FleetBoston Financial Corp.
Bank of America said the cuts result from combining consumer banking, consumer products and small business banking into one major banking line. In addition, the bank will move its premier banking division into the wealth and investment management organization.
Bank of America, which currently employs about 178,000 people, said the reductions will not affect employment commitments it made in New England after complaints by state officials in Massachusetts.
Bank of America announced last month that the wealth and investment management business would move to Boston, concentrating one the company's four major business lines in Fleet's former headquarters city.
That move was viewed as an effort to reassure Massachusetts officials that the company is committed to the Northeast.
In Thursday's news release, the bank also said the job reductions will not be among workers who deal directly with customers, such as tellers. Before its merger with FleetBoston, which was approved earlier this year, the bank pledged to maintain employment levels in what it calls ''customer-facing positions.''
Bank of America also said Thursday it will create a new group, technology, service and fulfillment, which will streamline the bank's service infrastructure.
The bank said Thursday it expects this round of layoffs to cost about $150 million in severance costs between the third quarter of this year and the first quarter of 2005.
Workers who lose their jobs are to receive career support resources, job posting services, extended benefits and severance pay.
In morning trading on the New York Stock Exchange, Bank of America shares were down 1 cent at $45.24, but that it still near its 52-week high of $45.37.
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Unisys to Cut 1,400 Workers
BLUE BELL, Pa. (Oct. 7) – Unisys Corp. plans to cut 1,400 jobs, or nearly 4 percent of its work force, and consolidate some facility space, moves that will help yield annualized savings of about $70 million a year by 2005.
The computer-services company, which employed 37,000 workers worldwide as of July, said in a statement Wednesday that the cost-cutting would result in an after-tax charge to earnings of about $63 million, or 19 cents per share, in this year's third quarter.
Unisys spokeswoman Elizabeth Douglass declined to comment on where the cuts would take effect.
The company also said it would have an after-tax benefit in the third quarter of about $70 million – or 21 cents per share – related to the settlement of audit issues dating from the mid-1980s.
The net result of the tax benefit and the cost reductions would be a benefit of $7 million – or 2 cents a share – in the third quarter, company officials said.
The company has struggled to achieve growth as corporate spending on information technology has been sluggish.
The company has said that it expects to report earnings of 8 to 12 cents a share, excluding pension accounting, for the third quarter. In the third quarter last year, the company reported a net income of $56.2 million, or 17 cents a share.
_________________________________________________________AT&T Will Slash 7,400 Jobs and $11 Billion in Assets
NEW YORK (Oct. 7) – AT&T Corp. is cutting at least 7,500 more jobs and slashing the book value of its assets by $11.4 billion, drastic moves prompted by the company's plan to retreat from the traditional consumer telephone business following a lost court battle.
The company announced Thursday that it now plans to shrink its work force by more than a fifth, or about 12,500 jobs, during 2004 – up from a previous target of about 4,900 jobs.
Most of the jobs cuts are layoffs. About 9,000 of the people affected have already left the company or been notified. AT&T now expects to finish the year with about 49,000 workers, down from nearly 62,000 at the start of 2004.
Severance costs and other expenses related to the job cuts will reduce third-quarter earnings by $1.1 billion, the company said.
The asset writedown of $11.4 billion – about a quarter of the company's assets – reflects the reduced value of AT&T's network now that it will be carrying less consumer voice traffic. It will be charged against earnings in the third quarter.
While the writedown is an acknowledgment that AT&T wasted billions of dollars upgrading its network and marketing to consumers, the sharply reduced value of the company's assets will mean tremendous savings on paper in terms of depreciation expense.
To begin with, AT&T said, the writedown will reduce depreciation expense by about $1 billion in the second half of 2004.
Depreciation is an accounting method that reflects how wear and tear reduces the worth of property and equipment. An estimated share of an asset's value is subtracted from earnings with every passing quarter. Because AT&T's assets will be worth $11.4 billion less, the quarterly value lost to wear and tear falls.
The announcement came after the close of Thursday's regular stock trading. But shares of AT&T, which had slipped 16 cents to $15.04 on the New York Stock Exchange, rose 2.5 percent in after-hours trading, or 38 cents, to $15.42.
Many analysts have speculated that AT&T will make itself a more attractive takeover candidate by cleaning up its books and reducing depreciation expense. Talks to be acquired by former subsidiary BellSouth Corp. collapsed earlier this year.
AT&T, still the nation's biggest long-distance carrier with about 30 million customers, announced in July that it would no longer spend money to sell long distance or local service to consumers. The company is still spending aggressively to sign up homes for its new Internet-based phone service.
The withdrawal from the traditional phone business followed a federal court decision that will make it more expensive for AT&T to sell local service by leasing residential lines from the four regional Bells – who at the same time are luring away AT&T's long-distance customers.
Federal regulations struck down by the court decision had enabled AT&T, MCI Corp. and Sprint Corp. to lease those Bell lines at appealing rates set by state agencies.
Based on those regulations, AT&T invested heavily in advertising bundles of unlimited local and long distance, signing up 4.6 million homes for local service by the end of June.
The consumer business, once a cash cow that generated $25 billion a year in long-distance revenue, is expected to bring in less than a third of that amount in 2004. In addition to Bell competition, the business has been hit hard by rival technologies such as cell phones and Internet phone service.
With the company due to report third-quarter results in two weeks, the announcement of more job cuts and an asset writedown had been expected.
In an August filing with the Securities and Exchange Commission, AT&T warned that the value of its national phone network would need to be recalculated since it could no longer be relied upon to generate as much revenue.
AT&T invested billions of dollars upgrading that network, the company's biggest single asset, during the technology boom.
At the end of June, AT&T's assets totaled $43.8 billion, including $22.8 billion in property and equipment and $4.8 billion worth of goodwill, which reflects the premium AT&T paid above market value for acquisitions.
"In response to recent regulatory developments and a highly competitive market, we have made some tough decisions to reduce our work force and cut costs,'' said AT&T chairman and chief executive Dave Dorman.
The company said the acceleration of job cuts, reduced marketing and other efforts to reduce costs are having a positive impact on profitability.
AT&T also said it continues to generate significant cash flow in line with its previous targets for 2004. As a result, the company is on course to finish the year with net debt of under $7 billion, a reduction of almost 50 percent over the past two years. Net debt is calculated by subtracting a company's cash and liquid assets from its long-term liabilities.
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Job Increase at Rate That Was Less Than Anticipated
WASHINGTON (Oct. 8) – Companies added 96,000 jobs to their payrolls in September, fewer than economists forecast for the last employment report before Election Day, highlighting a modest pace of hiring that has become an issue in President Bush's bid for re-election.
The four hurricanes striking Florida and other coastal states the past two months ''appears to have held down employment growth, but not enough to change materially,'' the Labor Department said Friday in assessing September's national employment situation.
The nation's civilian unemployment rate remained at 5.4 percent.
Job growth was held down by losses in manufacturing, retail and information services. September's net increase of 96,000 payroll jobs was less than August's rise, which was revised down in Friday's report from 144,000 to 128,000.
Though 1.8 million jobs have been added to the payrolls of U.S. businesses since August 2003, there are about 800,000 fewer jobs – overall – than when Bush took office in January 2001.
That's a big political issue, especially in Rust Belt battleground states that have lost thousands of manufacturing jobs during Bush's presidency.
Bush's Democratic challenger, John Kerry, widened his lead on the question of who would create jobs. In a new AP-Ipsos Public Affairs poll, 54 percent of respondents favored Kerry on job creation, and 40 percent liked Bush. Less than half of likely voters, 47 percent, approved of Bush's performance on the economy.
Friday's report was sure to be closely scrutinized on both the Republican and Democratic sides, which offer starkly different views of the U.S. economy. Bush says the economy is growing steadily and jobs are being created. Kerry says jobs are being created, but there aren't enough new jobs to keep pace with population growth.
* Post was edited: 2004-10-08 16:39:00
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