1,200 layoffs announced by tech company
Lumen Technologies CEO Kate Johnson announced Tuesday that the company will be laying off about 1,200 employees as it remains almost $20 billion in debt.
In a third-quarter earnings report, Johnson said Lumen will lay off approximately 4% of its labor force. According to Fierce Telecom, Lumen had roughly 30,000 employees as of Sept. 30, which would make the number of employees affected by the layoffs about 1,200.
“We’ve made the difficult decision to reshape and resize Lumen for growth,” Johnson said. The CEO explained that the company expects that the layoffs, combined with “additional optimization initiatives” will result in annual savings of approximately $300 million. Johnson added that the company is implementing the layoffs as part of the “restructuring” of Lumen’s “balance sheet” in order to position the company for future growth.
The company’s plan, included in its third quarter report, anticipates severance costs and similar costs to be between $55 and $65 million. The layoffs are expected to be “substantially completed” by the conclusion of the fourth quarter.
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According to Fierce Telecom, Lumen has also taken other steps to reduce its $20 billion debt, such as the sale of its EMEA business. The sale of Lumen’s EMEA business is expected to provide roughly $1.5 billion that can be used to reduce the company’s debt.
In the face of mass layoffs, the company has committed its focus to designing new products and expanding its fiber footprint.
“During the quarter, we took significant steps to improve operations as we combine CenturyLink fiber with Quantum fiber, merging all inventory and field tech systems into one and vastly improved order to install commitment,” Johnson stated.
“While we believe these operational activities coupled with lower move activity, dampened subscriber ads this quarter, we do know that we need to do better selling and penetrating existing belts,” Johnson added. “Therefore, as we face a more constrained capital environment ahead, we’ll prioritize sales and marketing investments over enablement growth.”
Lumen’s third-quarter results showed a net loss of $78 million for the company. Last year, Lumen had a net profit of $578 million during the third quarter, according to Fierce Telecom.
Lumen CFO Chris Stansbury explained that the “macro environment and the overhang of Lumen’s creditor discussions has resulted in revenue headwinds, which will pressure our results over the next few quarters.” On the other hand, Stansbury said he anticipates the company will experience “sustained improving revenue trends in mid-2024.”