UPDATE 3-Sprint to cut up to 2,500 jobs, sees charge

* To cut up to 2,500 jobs out of 42,000

* Sees $60 mln-$80 mln charge

* Sprint shares up 20 pct
(Adds Sprint comment, share price)

NEW YORK, Nov 9 (Reuters) - Sprint Nextel Corp (S.N) is
starting the process of eliminating up to 2,500 jobs or 6
percent of its workforce this quarter as part of an effort to
shave at least $350 million off its annual expenses.

Along with the elimination of 2,000 to 2,500 jobs, Sprint
said it would also cut back on the use of outside labor
including contractors, resulting in 60 percent of the $350
million projected savings, the company said on Monday.

Sprint, which has about 42,000 workers, forecast a $60
million to $80 million charge this quarter for severance
payments and other costs related to the latest round of
layoffs, which follows 8,000 job cuts already this year.

This adds up to a total workforce reduction of 16,500 for
Sprint this year, including the September transfer of 6,000
Sprint employees to Ericsson (ERICb.ST) after the Swedish
company agreed to manage Sprint's network.

One analyst said the savings would not make a big
difference for Sprint, which would still have high costs.

"Financially, it helps," said Stifel Nicolaus analyst
Christopher King, but he added: "$350 million in annual expense
savings isn't much for a company that has roughly $26 billion
in annual operational expenses."

On Oct. 29, Sprint posted a third-quarter loss of $478
million, or 17 cents a share. It ended the quarter with a
balance of $5.9 billion in cash and cash equivalents and
forecast positive free cash flow for this quarter.

The No. 3 U.S. mobile service said many of the job cuts
would happen by the end of December and would include jobs
across the entire company, including layoffs in its wholesale
unit.

Last week, Sprint, which has been working on stemming
customer losses in its mobile business, said it was planning
dozens of layoffs in its wholesale business due to a lack of
growth in its landline business.

Sprint shares closed up 58 cents, or 20 percent, at $3.43
on New York Stock Exchange after the news.
(Reporting by Sinead Carew; editing by Carol Bishopric, Andre
Grenon and Matthew Lewis)