Thread regarding AT&T layoffs

“This RTO is bigger than Stankey.”

Maybe the industry RTO is bigger, but the T execution is RTO in name only. It’s a reduction exercise as well

Maybe? prepairing to sell off a lot of the pieces of AT&T, if the sale does not come with a lot of employees and a a large portion of the sale will be for already in the ground copper, easements and soon an ILEC can then make a purchase without the stipulation that they maintain employment for x period of time and avoid the cost of onboarding people who do not want to be there.
Windstream, Cox, Amazon have let it be known over the past 12 or more years (excluding amazon) they want into wireless, both of these companies would have to divest if they purchased the entire AT&T which is expensive and the DOJ gets involved heavily. By selling smaller pieces of the wireless to various entaties anti-trust issues are avoided. but the technical people are still intact to maintain it, and a transitional period would be built into the sale price for AT&T to provide at a COST the support from Dallas or Atlanta which they will maintain ownership of as AT&T for other pourpouses.
I do not know ?

This RTO is bigger than Stankey.

As an example- in the same time frame Charles Schwab released its RTO policy which includes some of the same stipulations and timelines. (Ending virtual, office consolidation and 3-5 days in office.)

There is a coordinated effort among multiple corporations to fall in line and they are using similar strategies and talking points.

"wasting everybody's time"

I actually like this thread. not wasting my time fwiw. some new ideas I haven't seen before. if it wastes your time, it's easy enough to scroll past.

"it's been respectful, so what's your problem?"

Asking "what's your problem" is certainly very respectful. The problem is you are running in circles, over thinking, over analyzing with your own logic which may not exist in the decision making, wasting everybody's time.

"You're thinking of your time at your next company. "

Man, it's sad if anybody picks up this loser. He's absolutely tainted by enormous failure. There will be no turnaround with this, and I think he knows it. Could he be a failure at even doing a hatchet job?

" said, "I see the Facebook and Google are calling workers back to the office, so why aren't we?"

This is definitely the part about that I could see happening. What I'm really surprised at, though, is that it had to have been done isolated in a boardroom. I don't expect them to ask AVPs and directors about the impact, but I certainly think down to VPs and SVPs would have immediately clued them that it would be disastrous.

For something like Warner or DirecTV, this scenario carries a lot of weight, because they wouldn't have consulted with SVPs, VPs, and so on. It would have been entirely in their little echo chamber.

But if, as several suggested, this RTD resistance is actually surprising them, then this "let's be like Facebook" could have been the proximate cause of the decision. Amazing how quickly it's fallen apart.

Here is some fun...

What about Stankey's personal motivations to pivot his executive style?

Placing ourselves in his shoes...

At some point, after careful self examination, you may realize that your efforts to grow the business are failing and you're missing your targets.

The board is full of your friends but they are unhappy. You have pressures from your lenders and external entities to provide value for them by alleviating corpo real estate, installing DEI initiatives and fight against rising rates in a competitive environment where you are being attacked at all angles by your own past failures.

Youre on your way out. One way or another.

You've placated the board as long as you could.You need to pivot. You pivot your personal style from the CEO type that is promoting growth, expanding business, and making smart acquisitions... to the CEO known for gutting a company into profitability, a hatchetman.

Youre not thinking of AT&T. You're thinking of your time at your next company.

Put yourself in that frame and rethink OP's exercise.

"The OP is soliciting 'intelligent' discussion, but he's basically trying to refute every point others brought up. "

I expect to be challenged in my initial assertions, and I expect to challenge responses, to try to suss out some semblance of truth. That's generally how intelligent discussion works, and it's been respectful, so what's your problem?

Couple of thoughts from the Herd Mentality OP here:

"Company being prepared for a Taxpayer bailout" is downvoted, but it's no less wacky than some of the other possible explanations, especially given the thread OP's observation that there are much faster ways to improve FCF.

Bailout fits the "hey, a squirrel!" distraction from the real FCF problems, and if it works, Stankey smells like a rose, having lead the pivot from struggling telco to entrenched government contractor.

Back to herd mentality: I wonder if some of the fossils on the board of directors looked across the table at John and said, "I see the Facebook and Google are calling workers back to the office, so why aren't we?"

And so the guy who never worked anywhere else in life took the cue from his superiors and came up with this plan.

The OP is soliciting 'intelligent' discussion, but he's basically trying to refute every point others brought up.

"Management HC reduction which will eventually result in about $4 Billion in incremental FCF is his lifeboat. (20,000 management employees @ $200k each)."

If you take the severance payout (up to 6 months) into consideration, it's only $2 billion savings in the first 12 months. The cost savings from HC reduction will not show until next year, while the immediate effect of large severance pay will further strain the FCF.

@ekg+1neoI30C - Seems to be a pretty fair analysis - but I will counter with, an untargeted headcount reduction of a given percent is a far more efficient way of accomplishing a reduction, with none of the cost and less downside. I'd argue that a move do Dallas is much less effective at removing "old white guys" (or older people of higher salary in any other category).

In fact, in my larger group, of people who have actually made their decision known to colleagues before the letter, the only ones considering a move are actually older employees with more tenure. Younger folks don't see a future hear, and the two hires we've made in the past few years, would not go. So I'm not arguing that it could be an inept way to do what you've outlined, but it's truly one of the worst ways to accomplish it.

Big FCF miss in Q1 and that is not going to improve. JS knows this and needs something big to report and deflect from the upcoming FCF miss prior to Q2 reporting in July. Management HC reduction which will eventually result in about $4 Billion in incremental FCF is his lifeboat. (20,000 management employees @ $200k each). The targeted HC group is non-Dallas based highly compensated older white guys. Force reduction targeting of just this group would likely result in multiple EEO age related class action lawsuits. The answer is RTD which few employees other than VP level individuals will agree to. The result is HC reduction of the targeted group without any fear of future lawsuits. 20 something graduates of Texas Tech that are based in Dallas have nothing to fear.

Most of the discussions in this thread are about reasoning trying to figure out why they did it and why did it this way. As far as the end state, it's clear that the company wanted to shrink down to only a few hub cities in the US. Whether it's good or bad, wise or stupid, is up for another debate.

Company being prepared for a Taxpayer bailout by creating urgency of bailout of US Critical Infrastructure or collapse. By September AT&T will get bailout

"What about herd mentality?"

Certainly a possibility, but again I'd raise the question - there are far easier, less expensive, and less disruptive ways to become part of the herd. Many of the largest business units are going straight to Dallas - with no discernible rhyme or reason why they are and others are collecting in hub cities with eventual fade to Dallas.

Unlike FAANG, Salesforce, et al, AT&T has to have a national physical footprint by nature of its business. So this half-ar-e, slapdash half-baked semi-consolidation doesn't seem better than consolidating entirely in different regions and handling the rest through attrition and backfill.

What about herd mentality?

A number of big techs and banks (FAANG along with Salesforce, JP Morgan and others) have announced RTO and it's getting a lot of positive coverage that's basically what their press releases say. (Just stay away from the comment sections, especially if you own commercial real estate.) Never mind the lack of productivity data, RTO is publicly about good feelings in the C-Suite for productivity (read more on this from Ed Zitron), and privately it's all about real-estate pressures coming from both landlords and municipalities. A lot of these companies invested heavily in new towers and campuses before COVID and they're not able to recoup the value, so bring 'em back in, shall we? Vast empty cubicle warrens or closed-off floors in a tower is not a good look.

Speaking of municipalities, leadership at Federal Government agencies are concerned about the crisis for downtown DC businesses, so they're going RTO in DC. To be fair to the Washingtonians being forced to schlep back in, they're extending the mandate rapidly to their workforces across the country. And we do a lot of business with those people.

But as the OP notes, these are not really factors for AT&T (though I did read the cost of upgrading Dallas for the anticipated era of media conglomerate was ~$120M.) So what is?

Our Texas cowboys have penchant for stumbling in late to a party smelling of manure and testosterone and driving off investors with their stank. Stephenson did it in being too late on expanding wireless after the gift from Apple for iPhone exclusivity. He did it again with the fumbled attempt to acquire T-Mobile, a breathtaking feat of clumsiness considering that the same administration had been just fine with allowing NBC and Comcast to consummate a merger.

DirecTV was a real head scratcher unless, of course, CEO and deputy strategy guy don't think a $300 cable bill is painful—and it's not when you make that much in 2 minutes (do the math).

After Stankey took over he quickly pivoted away from the entertainment biz back to telecomm; to continue the analogy, when his senior podner left the movie screening for his own ride into the sunset, our current cowboy yelled "yeehaw" and ran back outside to spin up lassos and fiber loops. It was awkward and embarrassing, but probably the right move.

OP makes good points that have no immediate answer, so as we seek to understand the thinking behind RTO at AT&T, a I'm tossing in "following the herd" here for discussion. It would not be the first time AT&T took a cue from other companies, and arguably that's been our operating model since Whitacre completed his rebuild of Ma Bell and retired. It also comports with this secretive, hasty, and apparently poorly thought out plan. Quick! Jump on the RTO horse and worry about buttoning up your fly later.

Following the herd: could it be as simple as that?

They didn’t think it through. Save money by reducing headcount, consequences be dammed.

That’s it. That’s their end game.

You’ll drive yourself crazy thinking about it so much.

It's clear that Stankey brought the hammer down and left everyone else to clean up the mess. Headcount reduction could have been done strategically (and accomplished more quickly) by insisting that BUs cut a % of their workforce by XX date. Normal attrition and back-filling vacant remote positions with new hires in the hubs would have accomplished the rest (although not as quickly). The logic of the current RTD initiative defies logic. The disruption and unforeseen consequences of talent leaving AT&T because geography is more important than an individual's contribution to the company makes no sense to me.

The 4 possibilities you mentioned are the motives or potential benefits. The endgame is clearly stated in the notification itself: Basically to make everyone work in one of the 9 hub cities. Don't over analyze it.

I did find it telling that there were no 'hubs'from the original email in the Midwest. I know some organizations are backpedalling on that now, but that hardly seemed like a vote of confidence. If the company were at least considering a sale of some of the wireline footprint, I would think they would not want hubs in the territory the are selling off, as then all networking to that location would require paying a competitor.

"Selling of wireline assets may seem like a logical way to reduce costs "

I don't think that 'reducing costs' would be the point of selling assets - it would be to free up money to pay down debt. I don't disagree with what you said, but a fire sale is one way to raise money.

That said, RTD seems to be a distraction if that is indeed the plan.

You’re trying to make sense out of something that makes no sense.

It wasn’t a rational decision to throw a blanket over everyone and tell them to move or leave. Same as the irrational billions to T-Mobile, buying direct tv at the height of cord cutting (I have no biz sense and even I knew that was stupid AF) etc etc etc.

You give them too much credit.

Selling of wireline assets may seem like a logical way to reduce costs but that’s not entirely true. Wireless is still the bread and butter of the telco firm. While many businesses and consumers no longer utilize antiquated copper services, there are huge institutions with wireline contracts. Large school districts, government entities, etc come to mind. These are lucrative and require very little maintenance aside from contract administration. In fact, many of these contracts are slowing down or altogether preventing the sunsetting of certain telco products. Selling wireline assets could happen but it would be a lengthy and complex process.

" So perhaps this consolidation is still a goal and rather than wait for attrition, it's gotta be done with one swipe of the sword."

Yes, that would be a partial explanation - but it still creates far more problems than solutions, in my mind. They are in dire straits with FCF, and RTD is not only a huge distraction, but also a costly one. Backfilling in Dallas would certainly address your other point, that all this talent is simply not there right now.

There has been a long standing plan, well at least it was talked about years ago (around the Workplace 2020 / collaboration zone plan and before) that personnel would be consolidated to certain locations thru attrition - someone located in chicago area would retire or move on, replacement would come from Atlanta or Dallas area. Covid messed this up, but also it's not really possible to find the right levels of experience and knowledge for a lot of things within those small geographic areas. So perhaps this consolidation is still a goal and rather than wait for attrition, it's gotta be done with one swipe of the sword.

Too long.. next!

This company is the corrupted SBC at its core. It has been dropping all the failed parts it acquired and destroyed over the years. The end state is turning back into its former self.

"When Stankey was the CIO of SBC he wanted to consolidate IT to 4 locations. This effort was disrupted by the acquisition of AT&T. Makes me think he is a true believer in workforce consolidation."

I can understand this, but again, this is a sledgehammer to get it done. He could have implemented a gradual policy of backfilling IT positions only in the four (or whatever) key cities and it would have been mostly accomplished by now. But now they are willing to "burn down all the villages in order to consolidate them" which seems to be an almost impossible way to get to where they want.

When Stankey was the CIO of SBC he wanted to consolidate IT to 4 locations. This effort was disrupted by the acquisition of AT&T. Makes me think he is a true believer in workforce consolidation.

"What do you of the possibility of the sale of an entire region's (i.e., Midwest) wireline footprint as an opportunity to raise cash and provide cover for cutting the dividend again"

OP here - I don't know enough about wireline assets to know if this idea is good, bad, or indifferent. But even if it was a fantastic opportunity - I don't see how RTD enables it nor enhances it. It's a complete distraction if a sale is indeed the goal.

As for cutting the dividend - as an investor, I think that if a company fails as many times and as dramatically as this one has recently, that it should be cut.

I hope you are correct about the dallas hub not being prepared that is where they will be sending us its just a matter of when. Alot of us are within months to 1 year to be within 2 years of retirement to take the tola. They just announced the sales group in our building they are relocating them to lubbuck.

To add further context to 3 - leadership is finding it far more difficult to consolidate to the 9 core locations than was originally anticipated. The amount of “sub-core” locations continues to increase as the realization is setting in. Don’t make assumptions that your location will be eliminated and you will be asked to relocate if you are not in the core footprint. At a corporate and even organizational level, things are extremely fluid. Wait it out. Those that are 50+ miles away from the nearest AT&T building are the most jeopardized employees at this time. Of course there are exceptions and none of this info will apply to all, but things are in flux.

Excellent points here. What do you of the possibility of the sale of an entire region's (i.e., Midwest) wireline footprint as an opportunity to raise cash and provide cover for cutting the dividend again? Brightspeed (owned by Apollo Global Management, a private equity fund) would have the deep pockets to do it and now operates a pretty large footprint in the Midwest region already.

"Leadership in panic mode"

OK, let's say it's true.

Even the most cursory input on RTD would reveal what I'm saying in the OP. I know senior leadership is inept, granted. But even the worst dealings have had some sort of twisted logic that works out in practice if not in theory.

I can not accept that this very complex and convoluted RTD "plan" would have played better in high-level discussions than an "ordinary" surplus, even one of great magnitude. The most panicked C-level listening to their amygdala would have migrated toward a fast and 'easy' solution - not this uninformed mess.

Leadership in panic mode. They don't plan, they don't foresee, they just react and have been a day later and dollar short for decades. Zero Accountability other than the share price and employees getting decimated. Leadership and Board have barely anything tethered to the share price. The company is going to lose so many key people and are sending them off angry and I don't blame folks for not wanting to assist those who are left while they are shoved towards the exits.