Sprint Nextel to Cut Up to 2,500 Jobs

Sprint Nextel plans to lay off between 2,000 to 2,500 jobs in the fourth quarter of 2009. The Overland, Kan.-based wireless technology carrier wants to slash about $350 million in internal and external labor force annualized, but will spend between $60 million and $80 million in severance packages for employees and related job reduction costs.

Details on where all of the job cuts are being made are not known, but Sprint Nextel said it will be "companywide" and include the previously announced job cuts in its Wholesale group as well as the cutting of outsourced labor and contractors.

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"The labor cost reductions are the latest action in the company’s efforts to make its cost structure more competitive in the industry and to remain financially secure in a challenging economic environment," said the company in a statement.

Sprint Nextel formed in 2004 as the merging of two former competitors that included Sprint's and Nextel's respective wireless businesses. The company competes with big players of wireless in the United States—Verizon, AT&T and T-Mobile—plus smaller carriers.

The Wall Street Journal characterized Sprint Nextel's business as "struggling." WSJ wrote:

"The nation's No. 3 wireless service provider has the cost structure of a national player but in recent months has behaved more like a low-cost pre-paid service provider. While the company continues to bleed out its most valuable contract subscribers, it has seen success with its lower-priced Boost Mobile service, which generates lower revenue and profits. That business, however, competes with such players as MetroPCS Communications Inc. and Leap Wireless International Inc., which both boast much leaner operating models."

The company cites that it has been able to close 27 call centers while still maintaining high customer service ratings. The company states that it will provide outplacement services for those employees affected by the job cuts.

Ending in the third-quarter 2009, Sprint Nextel reports a balance of $5.9 billion in cash, cash equivalents and short-term investments, and said it "expects to continue to generate positive Free Cash Flow during the fourth quarter of 2009," according to a statement.