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Sprint Streamlining Will Cut Costs by $1 Billion

Posted on: Wednesday, 17 September 2003, 06:00 CDT

Sep. 18--Sprint Corp. said Wednesday it will cut costs by more than $1 billion annually over the next three years through a major reorganization of the Overland Park telecommunications company.

Savings of 5 percent to 7 percent over the three-year period will come through a consolidation plan, which is expected to let the company eliminate redundant jobs and systems and automate others.

Sprint chief executive Gary Forsee said earlier this summer that by the end of the year he wants the company's product-oriented divisions -- local, long-distance and wireless -- to be consolidated into two customer-oriented divisions -- one focused on individual consumers and the other focused on business customers.

"Ultimately, the transformation represents a fundamental shift for Sprint that I expect will move us forward to a new level of performance," Forsee said Wednesday morning.

The reorganization also is expected to lead to additional job cuts, although a Sprint spokeswoman Wednesday declined to specify when they may occur. Sprint, the area's largest private employer, has shed more than 18,500 employees in the last 24 months, including about 6,000 in the Kansas City area.

On Monday, Sprint disclosed plans to outsource some information technology jobs, which could result in "several hundred" layoffs over the next three to nine months. The outsourcing plan is a test of a larger project that could eliminate additional Sprint technology jobs and transfer those positions to lower-paid workers overseas.

Forsee, who rejoined Sprint earlier this year, said the plan to reorganize Sprint into two business divisions will allow the company to sell more services to each customer and provide better customer service.

To make that happen, Sprint will combine existing products and services into new offerings, and expand the company's nationwide distribution channel to sell a complete portfolio of services, he said.

Forsee said sales to lucrative business customers would benefit from the new unified sales approach, and he cited Sprint's recent decision to sell local phone services outside its own local network as a chance to access an "untapped" consumer market.

"The revenue goal of the transformation effort is to grow faster than the competition," Forsee's statement said.

Forsee said acquiring new customers and selling more services to existing customers is "equally key" to the company's growth goals. Just increasing sales to Sprint's 26 million customers by 1 percent or 2 percent could equate to hundreds of millions of dollars in new revenue, he said.

"We are putting a high priority on simplifying our business processes," Forsee said.

In Wednesday's statement, Forsee reiterated earlier comments that Sprint will combine its FON and PCS tracking stocks. He didn't offer a timetable for the stock move.

Sprint reported total revenues of $26.63 billion in 2002 with a net income of $630 million. The company entered the year with about $21 billion in debt. Following cost cuts and the sale of its directory business, Sprint has cut that debt to just more than $17 billion.

Sprint told Wall Street it would cut its debt to about $14 billion by the end of 2004.

Forsee was named chief executive of Sprint in March after a stint at BellSouth Corp. He replaced William T. Esrey, who was forced out by the company's board because of a questionable personal tax shelter.

Sprint's two tracking stocks were up Wednesday. FON closed at $14.96, up 25 cents. PCS closed at $6.24, up 26 cents.

By David Hayes and Suzanne King

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To see more of The Kansas City Star, or to subscribe to the newspaper, go to http://www.kansascity.com.

(c) 2003, The Kansas City Star, Mo. Distributed by Knight Ridder/Tribune Business News.

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