AT&T slashes jobs, company’s valuation

AT&T Corp. is cutting 7,400 more jobs and slashing the book value of its assets by $11.4 billion, drastic moves prompted by the company’s plan to retreat from the traditional consumer telephone business after a lost court battle.

The company announced Thursday that it now plans to shrink its work force by a fifth, or about 12,300 jobs, during 2004 — up from a previous target of about 4,900 jobs.

Severance costs and other expenses related to the job cuts will reduce third-quarter earnings by $1.1 billion, the company said.

The asset writedown of $11.4 billion — about a quarter of the company’s assets — reflects the reduced value of AT&T’s network now that it will be carrying less consumer voice traffic. It will be charged against earnings in the third quarter.

Layoffs

Merger creates cuts at Bank of America

Bank of America Corp. said Thursday it would cut another 4,500 jobs beginning this month as a result of its merger with FleetBoston Financial Corp. and declining business in mortgages.

The 2.5 percent reduction of the work force, disclosed Thursday, comes on top of 12,500 layoffs that the bank previously said it expected to see from the mega-merger with FleetBoston, which went through earlier this year.

A spokeswoman for the bank, Alex Trower, said the newly announced reductions will be largely concentrated in support areas, such as finance, marketing and operation.

Transportation

Mexican regulators approve KC rail deal

Mexican regulators have approved Kansas City Southern’s bid to buy the country’s largest railroad company, the companies said.

Mexico’s Foreign Investment Commission has approved Kansas City Southern’s plans to buy the interest that Mexican transport giant Grupo TMM owns in Transportacion Ferroviaria Mexicana, or TFM, the companies said Wednesday. TFM carries 40 percent of that county’s rail freight.

Kansas City Southern wants to create a unified company, Nafta Rail.

Real Estate

Mortgage rates rise

Mortgage rates around the country went up this week, with 30-year mortgages climbing to the highest level since early September.

Freddie Mac, in its weekly survey, reported that rates on 30-year, fixed-rate mortgages rose to 5.82 percent for the week ending Oct. 7. That was up sharply from 5.72 percent last week and marked the highest rate since the week ending Sept. 9, when 30-year mortgage rates averaged 5.83 percent.

“The financial market thinks we’ve passed the ‘soft patch’ in the economy, which would translate into stronger growth in the coming months,” said Amy Crews Cutts, an economist with Freddie Mac. “Stronger growth means a greater threat of inflation and that means interest rates will start to rise in response to the threat.”

For 15-year, fixed-rate mortgages, a popular option for refinancing, rates increased this week to 5.24 percent, compared with 5.12 percent last week.