AT&T Wireless CIO resigns, company starts cost-cutting

AT&T Wireless Services’ CIO, Michael Benson, resigned Thursday, just days after news reports that the Redmond, Wash.-based company planned to lay off 1,800 IT workers.

AT&T Wireless Services’s CIO, Michael Benson, resigned Thursday, just days after news reports that the Redmond, Wash.-based company planned to lay off 1,800 IT workers.

In his memo to all AT&T Wireless IT employees, Benson said he would be replaced April 21 by Chris Corrado, who had headed the securities solutions practice of Wipro Technologies, a division of Bangalore, India-based IT services company Wipro. Before joining Wipro, Corrado was CTO at Merrill Lynch.

Benson said that he had planned his departure for several months and that the timing “was driven by the need to find the appropriate replacement.”

Benson’s announcement was posted on InternalMemos.com and confirmed by AT&T Wireless spokesman Mark Siegel.

Siegel said Benson’s departure was unrelated to news reports this week of layoffs in the company’s IT department. Benson’s memo did not indicate what his plans would be after leaving AT&T Wireless.

Siegel declined to comment on press reports of the IT department layoffs. But, he said, the company has “ambitious growth goals” and wants to turn the corner to positive cash flow. To accomplish this, Siegel said AT&T Wireless plans to “drive down costs as far as possible.”

Cost-cutting is being exercise companywide, including the IT department. The “Seattle Post-Intelligencer” reported last Wednesday that AT&T Wireless planned to lay off 1,800 of its 3,800 IT workers.

Although he declined to comment on the number of layoffs, Siegel characterized the total number that the company plans for its workforce of 33,000 as small.

Earlier this year, Michael Keith, president of AT&T Wireless Mobility Operations, said the company views its IT systems as a “strategic asset that differentiates our services and reduces our cost structure.”

Siegel said the company still views its IT department as a strategic asset, but as do all the other departments in the company, the IT group needs to meet cost benchmarks so that AT&T Wireless can meet its objective of achieving “positive free cash flow” this year.

Siegel added that the cost-cutting effort is also an attempt to help the company achieve profitability, though he declined to say when that would occur.

David Caouette, another AT&T Wireless spokesman, said the company’s capital expenditures this year remain on target and unaffected by cost cuts. He said it planned to spend $3 billion on building out and upgrading its networks. Those plans include a joint venture with Cingular Wireless, announced March 13, to build GSM/GPRS networks serving 4,000 miles of rural highways in the continental U.S.

Ken Dulaney, an analyst at Gartner, said AT&T Wireless isn’t alone in its cost-cutting efforts as the cellular industry faces slow subscriber growth.

But he said AT&T Wireless has additional burdens not shared by other cellular carriers, including what he called “paying the NTT DoCoMo piper.” In November 2000, NTT DoCoMo, a Tokyo-based wireless carrier, acquired 474.7 million shares of AT&T Wireless common stock in a transaction valued at $6 billion. At that time, AT&T Wireless agreed to roll out wideband Code Division Multiple Access (W-CDMA) developed by NTT DoCoMo in 13 of the 50 largest U.S. cities by June 2004.

Last Dec. 26, AT&T Wireless announced that it had scaled back that rollout to four U.S. cities and has delayed it until December 2004. That same day, in a filing with the Securities and Exchange Commission, AT&T Wireless disclosed that it would have to pay back NTT DoCoMo the $6 billion plus interest if it did not meet the W-CDMA schedule. Dulaney said this puts additional pressure on AT&T Wireless to roll out a technology that has met with little success outside Japan. “Cross-cultural imports don’t work,” Dulaney said.