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Archive for Wednesday, June 11, 2003

Sprint to cut 500 jobs

Company to phase out Web-hosting business

June 11, 2003

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— Sprint Corp. announced Tuesday that it would eliminate its Web-hosting business, resulting in the loss of about 500 jobs at the telecommunications giant.

Sprint plans to phase out operations at eight Web-hosting centers once its customers have made the transition to other providers. The centers are in Atlanta, Boston, Dallas, Denver, Los Angeles, New York City, Sacramento, Calif., and Santa Clara, Calif. Two Sprint Web-hosting centers in the Kansas City area and Reston, Va., will become corporate data centers that also support other Sprint network capabilities.

The actions announced Tuesday will mean about 500 employees will lose their jobs, most of them by the end of the year, Sprint said.

Sprint will continue to offer Web hosting through third-party providers, said company spokesman Nicholas Sweers.

The Overland Park-based company said it doesn't make economic sense for it to continue to operate the Web-hosting business.

For every $1 that the business brought into Sprint, the company lost $3 in expenses, Sweers said.

Sprint said Web hosting contributed about $60 million in revenue for the 12 months that ended March 31.

"I would say the new executive team is taking a very good look at what's profitable for the company," Sweers said.

Several new executives, including CEO Gary Forsee, were appointed at Sprint this year after longtime CEO William T. Esrey and president and chief operating officer Ronald T. LeMay left the company over questionable tax shelters.

Industry analyst Jeff Kagan said the move would help Sprint cut costs and focus on its core business.

Sprint said the winding down of the Web hosting business was expected to result in pretax charges of $400 million to $475 million.

Sprint FON, which is the tracking stock for the company's wireline business, is expected to take a 20-cents-per-share charge against its earnings in the second quarter related to winding down its Web-hosting business.

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