Sprint NASCAR sponsorship panned

"There's no correlation between fast cars and the branding of a network. It just doesn't make any sense"

The layoffs at Sprint have begun.

Chief executive Marcelo Claure said in his weekly newsletter emailed to employees that "job reductions" had started to take place. He wasn't specific about when they began, but his earlier references to job cuts have lacked any sense of when they would start.

A Sprint spokesman said in an email that he had no news to offer.

Claure and other executives have said job cuts would be part of the planned $2.5 billion in spending cuts underway. They have declined opportunities to say how many might lose work.

Sprint's chairman, however, has put the job displacements "in the thousands," according to published reports. Masayoshi Son, whose Tokyo-based SoftBank Group Corp. owns more than 80 percent of Sprint made the thousands statement in Japan a month ago.

Layoffs hit Sprint's workforce in 2014 when the company shed 1,700 jobs, principally from reviews of its information technology, portfolio management, network and technology groups.

Claure announced a plan in November 2014 to cut 2,000 more jobs, pushing the total to 11 percent of its workforce. Sprint employed about 31,000 at the end of March, its last reported total.

The earlier cuts were part of an effort to cut $1.5 billion in spending.

Management has said that this round of spending cuts would not rely on payroll alone but look throughout the company for savings.

Chief financial officer Tarek Robbiati reiterated the plan to scrutinize all spending throughout the company during a presentation at an industry conference on Friday. He did not mention jobs.

Claure had made his comment in the newsletter as part of a discussion about these changes and others aimed at transforming the way Sprint does business. These, he said, would save money and drive growth for the company.

He announced, for example, that Tim Donahue, a 19 year employee at Sprint, would become the region president in Kansas and Missouri. The appointment is part of One Sprint, an effort to decentralize operations to allow four area presidents and 19 market or region presidents greater control in their markets.

"While the creation of the One Sprint approach will put new leaders in place and staff new organizations in the various regions, it is being balanced by our actions to make other parts of our business smaller," Claure's newsletter said.

He also told employees that management is "taking costs out of our business through a range of many types of actions. And yes, some of these actions will involve job reductions that already have started to take place."

Robbiati, at the industry conference, listed several areas where he sees potential spending cuts.

He said spending on customized information technology projects was "unsustainable." He saw savings in real estate, in reducting Sprint's use of other networks to cover some markets, and in all elements of corporate overhead.

Robbiati also singled out one marketing cost that Sprint already has said would end, namely its 36-race NASCAR Sprint Cup Series sponsorship.

Telecom companies, Robbiati said, have an unjustified love of "fast cars" in their marketing. He said British-based Orange, a telecommunications company where he worked from 2003 through 2005, had a thing for Formula 1 racing.

"There's no correlation between fast cars and the branding of a network. It just doesn't make any sense," he said.

Better, he said, to spend money where customers are making decisions, in retail stores and other sales channels, and especially locally where marketing is more effective.

"Customers remember this and probably will never remember the car that is running past them at too fast a speed to remember the little sticker that says Sprint on it," Robbiati said.

Sprint had said a year ago that it would drop its NASCAR sponsorship when it runs out at the end of the 2016 season. In July, it said it would drop its NBA sponsorship.

Robbiati also announced that the $1.1 billion in cash Sprint was to receive from a unique funding deal had arrived Thursday. It plans to repeat the deal regularly, though in smaller amounts.

That, plus other funding Sprint has from an increased credit line with bankers and from equipment suppliers, means the company has the funding it needs for the next 12 months, he said.

Some large debts are coming due next year, however, and that has focused management on reducing spending by $2.5 billion.

"We are well funded," he said. "Now, it's all about cost take-out." KansasCity.com