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AT&T to cut over 3,000 more jobs

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CIOL Bureau
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CHICAGO: Long-distance telephone and cable-television giant AT&T Corp.

will likely cut over 4,000 more jobs during the next few months in addition to

the 9,000 it has already cut, a source close to the situation said on Friday.

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Including the expected additional job cuts, AT&T's work force would be

reduced by more than 12 per cent from the 125,000 employees it had at the

beginning of 2001. AT&T spokeswoman Eileen Connolly declined to comment on

the number of additional job cuts AT&T will be making.

However, she said, "AT&T is taking many steps to cut expenses and

drive costs out of the business to remain competitive in a very challenging

industry.

"We will look for additional ways to trim costs and will continue to

adjust the size of our work force to meet marketplace needs. Some organizations

will get smaller, while others, in our growth areas, will expand." The Wall

Street Journal on Friday reported that AT&T was expected to cut up to 10,000

more jobs over the next few months.

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The source said, however, that the newspaper's estimate was too high, adding

that AT&T's executives have not yet finished reaching decisions about it.

"It's probably over (3,000) or 4,000 but somewhere probably under

(10,000)," the source said. Steve Mygrant, fund manager for Fifth Third

Technology Fund, said he would not be surprised if the number of additional job

cuts approached 10,000.

"We haven't seen any evidence of an improvement in business conditions

that would suggest that they shouldn't be continuing to cut costs pretty

aggressively," Mygrant said. "We're not bears on the economy. We just

think that things are tough, we'll continue to see weakness in the

telecommunications service industry, and that would seem to merit cutting

costs."

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AT&T said last month that it expects to take a fourth-quarter

restructuring charge, which would include costs related to additional job cuts.

Shares of AT&T rose 6 cents at $17.04 on the New York Stock Exchange in late

afternoon trade.

More restructuring may be in the works at AOL Time Warner

The world's largest Internet and media company hinted at such a move in a

regulatory filing this week, and Wall Street analysts said it would be in line

with recent comments from executives.

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AOL Time Warner said in a filing made Wednesday that its "restructuring

plans are expected to be refined in the fourth quarter as management continues

to evaluate the integration of the combined companies and completes its purchase

price allocation."

While most Wall Street analysts do not expect a drastic round of layoffs,

they said executives have repeatedly said they will aggressively cut costs and

shuffle around management.

Like many of its peers, AOL Time Warner is trying to maintain growth at a

time ad spending has deteriorated and economic uncertainty casts a pall over the

media industry. It is also contending with higher costs at its news operations

due to coverage of the war in Afghanistan and the aftermath of the Sept. 11

attacks on the United States.

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"As we've said in the past, we are always looking at ways to run our

businesses more efficiently," an AOL Time Warner spokeswoman said.

So far this quarter, a handful of jobs have been cut in the flagship Internet

unit's marketing group, and recently-acquired UK magazine publisher IPC cut 115

jobs as part of a decision to shutdown six magazine titles and its exhibitions

business.

The Internet and media giant has also cut jobs at AOL, 24-hour news network

CNN earlier in the year and offered many Time Inc. employees buy-out packages.

It also closed down its Warner Bros. Studio Stores.

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Musical chairs have also occurred at its cable systems unit, its Internet

unit AOL, and its networks unit, which could suggest more changes in those

areas, analysts said. Earlier this year, Jamie Kellner was named to head up the

company's network operations and Walter Isaacson was shifted from Time Inc. to

CNN to head up the news network.

In August, the company named Joseph Collins chairman of its new interactive

video unit and replaced the head of the Time Warner Cable group with Glenn

Britt, who had previously been president of the cable business.

More recently, it replaced Chief Financial Officer Mike Kelly with Turner

Broadcasting Systems CFO Wayne Pacy, moving Kelly to manage day-to-day

operations of the flagship AOL Internet unit as chief operating officer.

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Although CIBC analyst John Corcoran does not necessarily see a significant

round of layoffs before year-end. he thinks the company will continue to shuffle

the top-ranks to make sure people are in the right spot.

"We are already seeing changes in management. There may be something

associated with that. On the cable networks side, they may trim the fat and

figure out where they don't need certain operations," added Paul Kim,

analyst at Kaufman Brothers.

"You have to figure in the music business that they are seeing secular

downtrends, not cyclical. Something has to give there," Kim said. Salomon

Smith Barney analyst Lanny Baker agreed that the company's music business has

not performed well and he would not be surprised if cuts came from that unit.

(Additional reporting by Reshma Kapadia)

(C) Reuters Limited.

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