AT&T Plans to Reduce 12,000 Jobs, Spending as Slump Deepens (Amy Thomson)

Dec. 4 (Bloomberg) -- AT&T Inc., the largest U.S. phone company, will cut 12,000 jobs and reduce spending next year, striving to become leaner as the U.S. economy falters. 

The reductions amount to about 4 percent of the workforce, and will lead to $600 million in severance expenses this quarter, Dallas-based AT&T said today in a statement. The company plans to give specific forecasts for 2009 spending in late January. {xtypo_quote_right} The carriers are competing for a smaller pool of new customers as more people use mobile phones. Wireless penetration has reached 84 percent in the U.S., according to wireless industry association CTIA. {/xtypo_quote_right}

AT&T joins smaller rivals in paring back as they grapple with slowing consumer spending and a jobless rate at its highest level in 14 years. Chief Executive Officer Randall Stephenson is focusing on faster growing businesses such as the wireless unit to help maintain profit margins, with plans to keep hiring there.

“Cash is king in this type of environment,” said Christopher King, a Baltimore-based analyst at Stifel Nicolaus & Co. “The more flexibility AT&T has, the more cash to shareholders or the more cash to reduce its debt.” AT&T had about $17.4 billion in debt due in one year as of last quarter.

AT&T rose 19 cents to $29.27 at 9:45 a.m. in New York Stock Exchange composite trading. The stock had dropped 30 percent this year before today.

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