Sprint Nextel to cut workforce, close underperforming stores

In response to an increasingly difficult retail environment, Sprint Nextel says about 4,000 employees will be laid off and about one out of every eight retail stores will close.

Expecting a slowdown in both revenue and subscriber growth in 2008 amid an economic downturn, the move could be seen as a preemptive strike in order to keep the carrier profitable.

The cuts mean about 125 stores will close. Although it will take a first quarter charge for severance charges, the company will save about $700 million annually in labor costs by cutting its workforce.

Sprint has been struggling to keep customers, as it has been besieged by a variety of problems. Many subscribers view its customer service as poor, and network issues have only magnified those problems.

For the quarter, the company gained about 776,000 customers through its wholesale, Boost Mobile, and affiliate channels. However, those gains were erased by the 885,000 pre and post-pay customers who left the carrier.

Sprint's total customer base was 53.8 million at the end of 2007, up just 700,000 from the year previous.