NEW YORK (AP) – AT&T Corp. announced Thursday that it is cutting at least 7,500 more jobs and slashing the value of its assets by $11.4 billion, drastic moves prompted by the company’s plan to retreat from the traditional consumer telephone business.

The company now plans to shrink its work force by more than a fifth, or about 12,500 jobs, during 2004 – up from a previous target of about 4,900 jobs.

Severance costs and other expenses related to the job cuts will reduce third-quarter earnings by $1.1 billion, the company said.

The asset writedown of $11.4 billion amounts to about a quarter of the company’s assets, and reflects the reduced value of AT&T’s network now that it will be carrying less consumer voice traffic.

“In response to recent regulatory developments and a highly competitive market, we have made some tough decisions to reduce our work force and cut costs,” said AT&T chairman and chief executive Dave Dorman.

While the writedown is an acknowledgment that AT&T wasted billions of dollars upgrading its network and marketing to consumers, the sharply reduced value of the company’s assets will mean tremendous savings on paper.

The announcement came after the close of trading. AT&T shares, which had slipped 16 cents to $15.04, rose 2.5 percent in after-hours trading, to $15.42.

Many analysts have speculated that AT&T will make itself a more attractive takeover candidate by cleaning up its books and reducing depreciation expense. Talks to be acquired by former subsidiary BellSouth Corp. collapsed earlier this year.

AT&T, still the nation’s biggest long-distance carrier with about 30 million customers, announced in July that it would no longer spend money to sell long distance or local service to consumers. The company is still spending aggressively to sign up homes for its new Internet-based phone service.

The withdrawal from the traditional phone business followed a federal court decision that will make it more expensive for AT&T to sell local service by leasing residential lines from the four regional Bells – who at the same time are luring away AT&T’s long-distance customers.

The consumer business, once a cash cow that generated $25 billion a year in long-distance revenue, is expected to bring in less than a third of that amount in 2004. In addition to increased competition, the business has been hit hard by rival technologies such as cell phones and Internet phone service.

Most of the job cuts are layoffs. About 9,000 of the people affected have already left the company or been notified. AT&T now expects to finish the year with about 49,000 workers, down from nearly 62,000 at the start of 2004.

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