One of the cornerstones of PAETEC (PAET), the Rochester, N.Y., CLEC, is the value it places on its employees. So it must have been very difficult for executives to cut 222 full-time jobs last week with little outside notice.
“The action was primarily taken as part of a broader effort to improve operating efficiencies,” PAETEC wrote in a Dec. 5 Securities and Exchange Commission filing. “The company expects to incur total charges of approximately $6.6 million through the end of 2010 in connection with the terminations, the majority of which relate to cash severance costs.”
PAETEC lost $355 million, net, in 2008’s third quarter, despite higher sales numbers. Total losses for the first nine months of this year came to $373 million. Much of that stemmed from the McLeodUSA acquisition.
CEO Arunas Chesonis has said he doesn’t understand concern over the company’s well-being in a bad economy. When rough times hit, he said, businesses turn off their utilities – including communications – last. PAETEC is trying to bolster that point of view by reaffirming its intent to build a new $100 million headquarters in downtown Rochester. On the flip side, the CLEC still expects to spend $30 million in 2009 on “cost-cutting” measures such as layoffs.
PAETEC stock has been trading well below its 52-week high of $11.04. By early afternoon Monday, its shares were going for $1.31.