AT&T has announced thousands of additional job cuts as it tries to pay off debt, and yet, it continues to pay a healthy dividend. The company said the COVID-19 pandemic demonstrated that it could start earlier than originally planned with laying off employees.
AT&T cuts jobs but pays a dividend
AT&T is announcing another round of job cuts as part of its $6 billion cost-cutting plan. Bloomberg notes that the company carries some of the highest amounts of debt of any non-financial firm at over $160 billion. The layoffs are part of a plan CEO Randall Stephenson explained in October when he announced that AT&T would eliminate "big chunks of costs" in the next two years.
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"There will be targeted, but sizable reductions in our workforce across executives, managers and union-represented employees, the company said in a statement on Tuesday.
Communications division head Jeff McElfresh told investors during a webcast on Tuesday that the coronavirus pandemic gave them a "head start" on their cost-cutting plans. He said the stay-at-home orders issued across the country forced them to shut down stores and sell online as much as possible.
He also said the stay-at-home orders showed that AT&T didn't need to have as many stores. As a result, the company will be shutting down 250 stores. The company currently operates approximately 2,200 stores, and most of those stores had to be shut down during the height of the pandemic.
Criticism for AT&T's job cuts
The Communications Workers of America called out AT&T for cutting jobs and shutting 250 stores. The company told the union that it will eliminate 3,400 clerical and technician jobs in the U.S. in the coming weeks.
"If we are in a war to keep our economy going during this crisis, why is AT&T dismissing the troops?" union president Chris Shelton said in a statement about previous job cuts at the company. "AT&T could help lead the country toward recovery by partnering with its workforce to build next generation networks. Instead the company is adding to the pain of the recession already underway."
The union has pointed out in the past that Stephenson promised to create 7,000 jobs if President Donald Trump's tax cuts passed Congress. However, AT&T has cut over 41,000 jobs since that tax cut went into effect in 2018.
AT&T dividend yield now over 7%
While AT&T suspended its share repurchase program earlier this year, it continues to pay a dividend despite the job cuts. Forbes contributor Dividend Channel reported that during trading on Monday, AT&T shares were posting a more than 7% dividend yield.
AT&T continues to pay its dividend despite carrying a heavy load of debt and having to cut jobs. This demonstrates that like many large corporations, it is more shareholder-friendly than worker-friendly. The fact that the company is cutting jobs at a time when unemployment has been in the double digits is only adding to the economic damage caused by the pandemic.