The realities of raising the bar

Cingular Wireless CEO Stan Sigman, in what appears to be an early and inadvertent holiday gift to an AP reporter, said last week that his company will reduce its ranks by 10%, or around 7000 employees, in early 2005. The move, which the company reportedly had planned to announce after the first of the year, is a result of the company's recent acquisition of AT&T Wireless and will affect "big groups of people," Sigman said. "This isn't about closing stores of distribution channels, nothing like that," he told AP.

The actual significance of the news is not that Cingular has to cut jobs. That is inevitable in a rollup of any two similar companies, where there is likely to be a lot of overlap in positions and responsibilities at various levels and a need to find operational efficiencies throughout the combined organization. The big question is how quickly Cingular can achieve that efficiency to the extent that it is able to quickly add and retain customers--and, because of that, add more jobs--and maintain the coveted position of being the industry's largest wireless service provider. Sigman even went so far to tell AP that "if Verizon overtakes our customer count in the next six to 12 months, then I've failed."

Those months will indeed make or break Cingular's case for the acquisition of what many in the industry believed to be a company plagued with network performance and operational problems. Cingular won't--or at least shouldn't--be judged on the number of job cuts it has to make in the immediate wake of a major acquisition. Where it should--and will--be judged is on the efficiency of its integration of AT&T Wireless, the improvement of its network and service quality and customer service practices, and ultimately on how big those measures allow the company to get.

E-mail me at jmeyers@primediabusiness.com.