THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, August 16, 1994 TAG: 9408160307
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: Medium: 62 lines
Bell Atlantic Corp. on Monday itemized the toll it would pay due to cutthroat competition in the communications industry: the elimination of 800 jobs in Virginia, the loss of 5,600 jobs overall and a charge of $2.3 billion to restructure.
With the announcement, Philadelphia-based Bell Atlantic acknowledged that while the Baby Bell may still have a lock on local telephone service, most aspects of its business are changing so quickly that the company needs to adjust accounting procedures.
``While that may seem ho-hum,'' Bell Atlantic spokesman Paul Miller said of accounting changes, ``it has tremendous dollar implications.
``We're going from the way a regulated monopoly would do its accounting to the accounting standards competitive companies use.''
The company did not specify where or when the job cuts would take place, other than to say it would take 3.5 years to eliminate the 5,600 employees systemwide. All areas of the company's workforce would be hit, Miller said, and an estimated 25 percent of the jobs eliminated would be managerial positions.
Executive Officer Raymond W. Smith said the changes were a response to ``competition in our traditional markets and to enter new high-growth markets.''
Bell Atlantic is already experimenting in providing videos on demand, while long distance phone companies and cable television companies are lobbying for the right to go after the Baby Bells' lifeblood: local phone service.
The accounting changes recognize that in this competitive environment companies need to upgrade their equipment more often than they have in the past.
Dave Pacholczyk was among a group of Bell Atlantic spokespeople who staffed a bank of phones Monday to answer the media's queries about the accounting changes. ``There are five phones here,'' he said, ``and most of them are ringing most of the time.''
More than $2 billion of the company's restructuring cost was due to the accounting changes. A digital switch that the company used to depreciate over 17 to 19 years, for instance, will now be depreciated over 12 years.
``The life expectancy in today's technological environment just isn't what it used to be,'' he said.
Kurt Brunner, a communications industry analyst with PNC Bank in Philadelphia, said the restructuring was a necessary move for Bell Atlantic.
``If you look at it just today, it's still pretty much of a monopoly,'' Brunner said. ``But if you look at what should happen down the road, it makes sense.
``The way the industry is going to play out, these guys have to get a little more flexible.'' ILLUSTRATION: Graphic
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