Sprint eyes job cuts, fourth-quarter $165 million charge
NEW YORK (Reuters) - Sprint Corp (S.N) said on Thursday it would report a fourth-quarter charge of $165 million for severance and related items as a result of job cuts it is making across the company to reduce costs.
The No. 3 U.S. mobile operator, which is 80 percent owned by Japan's SoftBank Corp (9984.T), said it also expected more material charges in future periods associated with a workforce reduction plan that would include management and non-management positions throughout the company.
The operator, which currently has about 40,000 workers, did not say how many employees would lose their jobs. It is expected to finish the job cuts, which kicked off on January 16, by the end of June, according to a regulatory filing.
Wells Fargo analyst Jennifer Fritzsche said the cuts are likely long "overdue" if Sprint is to expand its profit margins.
"In our view, Sprint's cost structure has remained somewhat inflated since its acquisition of Nextel in 2005," Fritzsche said in a research note. Sprint, which has struggled to stem customer losses since the 2005 deal, finally shut down its Nextel network in the middle of 2013.
The cutbacks will involve its customer care and enterprise divisions and will also come from store closures, according to spokesman Scott Sloat, who said Sprint is still determining whether and to what extent there will be job losses in other parts of the company.
Sloat said the company needs fewer people to respond to customer calls because its call volume has decreased partly because it offers help online. Sprint's enterprise business will still hire in some areas while reducing jobs in others.
Sprint shares closed down 15 cents, or 1.65 percent, at $8.92 on the New York Stock Exchange after the news.
(Reporting by Sinead Carew; Editing by Chizu Nomiyama)
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