Still hobbled by its position as the number three wireless company in the United States, Sprint Corp. (NYSE: S) has elected to cut its workforce. It is not a good sign for the carrier that has struggled madly to catch industry leaders AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ).
In an SEC disclosure, management revealed:
On September 30, 2014, Sprint Corporation (the “Company”) began implementation of a workforce reduction plan to reduce costs and help become more competitive in the marketplace. The plan is expected to include steps to, among other things, improve operational efficiencies and reduce costs, as a result of which the Company expects to incur material charges under generally accepted accounting principles. This planned reduction is expected to be largely completed by October 31, 2014 and will include certain management and non-management positions.
The Company expects to recognize a charge of approximately $160 million in the second fiscal quarter of 2014 for severance and related costs, however, additional material charges associated with future labor reductions may occur in future periods. This estimated charge for the severance and related costs was determined based on an existing employee benefit severance plan and based on the information available as of the date of this Form 8-K. The majority of the above estimated charge is expected to result in cash expenditures by March 31, 2015.
Wall Street has laid siege to the company that trades at $6.25, against a 52-week high of $11.47. Sprint is run by Softbank chief Masayoshi Son, who appears to have made a poor bet. He had hoped to combine Sprint with T-Mobile US Inc. (NASDAQ: TMUS), the number four U.S. carrier, a plan that met with a great deal of resistance from competition and was unlikely to get regulatory approval.
Son must now gamble that he can either cuts costs to the bone to revive profitability or set a merger deal with one of the large satellite companies.