Sprint Nextel expects to lay off as many as 2,500 people by year's end, on the heels of reporting that it lost 545,000 customers in its third quarter.
The operator could let go as few as 2,000 people and expects to cut labor costs by US$350 million a year through the action. In the short term, the cuts will cost $60 million to $80 million in the fourth quarter, related to severance and other costs associated with the layoffs, Sprint said.
Employees across the company as well as contractors may be affected, Sprint said.
The operator said it would be careful to make sure that the employee cuts won't impact its recently improved customer service record. When Sprint's current CEO Dan Hesse took over in late 2007, poor support was a major complaint from customers. But the company has by now improved service so much that it has discontinued using 27 call centers as a result of decreased call volumes, it said.
Despite improving customer service, Sprint is still struggling. Its exclusive introduction of the Palm Pre, the first to run Palm's new WebOS, did not offer a much-needed boost for the operator. In addition to losing more than half a million customers in the third quarter, Sprint's loss reached $478 million, compared to $326 million last year. Revenue during the quarter declined 9 percent over the same period year-over-year.