United Telecommunications Inc. yesterday announced it will lay off 1,000 employees nationwide from its US Sprint long-distance division, or 5 percent of Sprint's work force of 20,000.
The announcement, which accompanied the report of a 55 percent drop in second-quarter earnings, was made by William T. Esrey, chairman and chief executive officer of Sprint's parent company, United Telecommunications Inc. Esrey said the reduction is aimed at cutting costs and spurring growth in the small business and residential long-distance telephone markets.
Company spokesmen said they did not know how many of Sprint's 2,800 Washington-area employees would be affected by the reductions.
United Telecommunications, which owns 80.1 percent of US Sprint, also said that it is delaying its purchase of GTE Corp.'s 19.9 percent stake in US Sprint, which was supposed to have been final in the third quarter.
Esrey said that the buyout might be completed "sometime this year." US Sprint also took a one-time charge of $72 million in the second quarter, in part as a reserve for the cost of the layoffs.
The combined actions pummeled United Telecommunications stock, which finished the day at $29.50, down $8.75.
Analysts said that US Sprint has lost market share in the long-distance market and lagged its two main competitors -- American Telephone & Telegraph Co. and MCI Communications Corp. They also said that the work force reduction may not be enough to give the firm momentum.
AT&T had 70 percent of the nation's long-distance market in 1989 in terms of revenue, while MCI had 13 percent, Sprint 10 percent and other companies the remainder, according to estimates by the Federal Communications Commission.
In its second-quarter report, the company said it earned $40.6 million (18 cents a share) during the quarter ending June 30, compared with $90.5 million (43 cents) during the same quarter a year ago.
Geoffrey Johnson of Argus Research said that US Sprint's performance during the second quarter was its "worst quarter in two years." Johnson said that this could be attributed to what he said was Sprint's failure to go after the low-end market of residential consumers and small businesses as aggressively as AT&T and MCI.
Johnson added that the firm is "over-staffed" and that management failed to give attention to its marketing efforts.
Herbert Maher of Cowen & Co. of Boston said the layoffs would have a "spillover effect on the other employees, damaging morale," which could make it difficult for the firm to revive marketing efforts.
Marienne Bye of Shearson Lehman Hutton said Sprint has suffered "a major setback and it will take them a couple of quarters before they can gain back their momentum."
Syd Courson, US Sprint assistant vice president for press relations, said that the reduction is expected to be completed by the end of the year.