Cutback Program’s ‘Remarkable Success’ Cited for Demise

NEW YORK, N.Y. ( – Less than one year after AT&T’s surprise decision to eliminate 120 percent of its workforce, (see story), the company disclosed today it has achieved its goals, with one unexpected side-effect: it has ceased operations.

Last December, AT&T initiated a sweeping cost-reduction plan that called for eliminating all 108,000 of its employees by the end of 2001 through a combination of layoffs, attrition, early retirement packages, and widespread use of the phrase, “You don’t work here anymore.” On Monday, the company achieved that goal when the last remaining employee, AT&T Chairman C. Michael Armstrong, accepted his own resignation and symbolically, “let the door hit my ass on the way out.”

AT&T's New York HQ on the block

The company also hoped to realize an additional 20 percent savings by instigating “external reductions” at companies not owned by or connected in any way with AT&T. But while Ma Bell sent out nearly 22,000 pink slips to employees at these other firms, none of the companies they work for chose to fire them.

The lack of external cooperation, however, was not a factor in AT&T’s dissolution, Armstrong insisted. Instead, he credited the company’s “remarkably successful” strategy of comprehensive internal cutbacks.

“Our internal reduction strategy was a complete success, and we are proud to report to shareholders that as a result, we have reduced internal expenditures to zero and saved nearly $6 billion,” said Armstrong, who also challenged AT&T’s former competitors to make such a claim. “However, there is always pain associated with gain, and we therefore additionally report that as a result of having no employees, AT&T is no longer a going concern.”

Speaking from his home in northern New Jersey, Armstrong said the company first realized it was no longer a viable operation just moments after he tendered his resignation. “I turned around to say goodbye to my co-workers and I was, like, ‘Hey, where is everybody?'” Armstrong recalled. “I was stunned at first, but then it occurred to me that we had achieved our stated goal, and frankly I said to myself, ‘Damn, I’m good.'”

While he acknowledged being surprised that the cutbacks led to a termination of the company, Armstrong defended his decision to implement the reductions.

“It’s easy to Monday morning quarterback, but at the time, we knew we had to do something to achieve a competitive cost position,” he said. “We could have reduced prices, but that would have squeezed our margins. Eliminating employees, on the other hand, would increase our margins. The choice seemed rather clear at the time … why are you laughing?”

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