Sprint Nextel to Cut 8,000 Jobs, Reduce Exec Pay

In what turned out to be a bad day for workers in a myriad of sectors, Sprint Nextel announced that it would be cutting up to 8,000 jobs.

Sprint, the number 3 provider of mobile services in the country, will see 14 percent of its current workforce out the door, the layoffs are the major component of a cost-cutting plan that will save the company nearly $1.2 billion a year. Among the departed is the company's chief information officer Kathy Walker. Sprint will take a $300 million first-quarter charge for severance costs. The cuts will likely be completed by March 31, and approximately ten percent of the cuts are coming from a voluntary separation plan initiated last year.

"They're in a situation where their backs are against the wall," said Robert W. Baird, an analyst with Will Power. "They're losing 1 million customers a quarter. Revenue is declining year over year in double digits. They had to find a way to cut costs."

Before she vacates her position on March 31, CIO Kathy Walker will work with network operations president Steve Elfman on a new management structure for Sprint's network and technology operations.

Sprint's shares rose five percent on the news today, and have been up around 49 percent over the last month due to reports that it would be the sole carrier for Palm's new Pre smartphone. This was confirmed true at CES 2009, but the company's stock is still about 70 percent lower than it was one year ago.

Along with the layoffs, Sprint said it would temporarily stop matching its employees 401(k) funds, as well as extend last year's suspension of annual salary increases into the new year. The 8,000 job cuts bring Sprint's 2008-2009 total layoffs to 12,000.

While times are dire for Sprint, they aren't the only company announcing layoffs today. Caterpillar laid off 20,000 workers, Home Depot saw 7,000 out the door, and Philips let 6,000 go as well. 41,000 people lost their jobs today among these four companies. To put that in perspective, my home town is roughly 36,000 people. What's worse, the recession isn't going to get better anytime soon.