U.S.

Sprint Caught By Slow Economy

October 17, 2001 / 5:55 PM EDT / AP

Sprint Corp., citing the weak economy and "a rapidly changing industry landscape," announced Thursday it will lay off about 6,000 employees, or 7 percent of its work force, and eliminate 1,500 contract workers' jobs.

Sprint had held out on layoffs even as its telecommunications competitors shed about 225,000 workers.

The company, the nation's third-largest long-distance provider, employs 84,000 worldwide — about 14,500 in the Kansas City area. Most of those workers were expected to move onto the company's massive new world headquarters in Overland Park, Kan., a campus so large it has its own zip code.

But Sprint's money-losing attempt to sell high-speed Internet connections has stalled, and ION was a vulnerable target. The company said it would stop further deployment of broadband services.

Sprint also said it will restructure elements of the company's various divisions, including Global Markets Group and the company's fixed wireless services — which refers to the operation of wireless devices or systems in fixed locations such as homes and offices — in an effort to save an estimated $1 billion annually starting in 2002.

Basically a souped-up version of a digital subscriber line, ION let customers connect to the Internet and simultaneously use one or more separate phones, all through a single phone line.

ION was ballyhooed when it was announced in 1998, but "it just kind of fizzled," said Tom Morabito, a telecom analyst with McDonald Investments in Cleveland.

Earlier this year Sprint said it had scaled back the deployment of the integrated voice and data service while it ironed out problems with voice call quality.

Ramkrishna Kasargod, an analyst with Morgan Keegan & Co. in Memphis, Tennessee, said Sprint had a choice: it could keep investing in ION, betting that it would be profitable eventually, even though it hurts the bottom line now. Or they could cut ION, sacrificing future earnings for a quick balance-sheet boost.

Kasargod said Sprint is in better shape than some other telecom companies, "because they do have customers, they do have revenues."

Most telecom companies have a product similar to ION, he said. And the technology isn't all that complicated, so bringing the service back later in another form might not be difficult, Kasargod said.

A proposed merger between WorldCom Inc. and Sprint fell apart last year when it failed to gain approval from the U.S. Justice Department and the European Union.

The telecommunications company was founded as Brown Telephone Company in Abilene, Kan. in 1899. The company, renamed United Utilities, was the second largest non-Bell phone company by the 1950s. They began using the Sprint name for long-distance services in the mid-1980s and became Sprint, Corp. in 1992.

The company began consolidating its world headquarters in 1997, breaking ground on a 246-acre, 17-building campus in Overland Park. Employees began moving to the campus in the summer of 1999Over 14,500 employees from 40 facilities around the Kansas City metropolitan area are expected to be on the campus by 2002.