Chicago-based Ameritech to cut 5,000 jobs

The company, which earlier in the day announced it had taken charge of $64 million against its first-quarter earnings, said the workers would come from its cellular and home-security divisions. But spokesperson Jerrell Ross declined to elaborate on where the bulk of those workers are based or whether any of the cuts would come through attrition.

"Last month, we outlined plans to reduce costs, and this quarter, we moved ahead as planned," Ross said.

The parent of phone companies in Michigan, Illinois, Indiana, Ohio and Wisconsin, Chicago-based Ameritech has been working to expand its range of communications services to keep revenue flowing as competitors enter the local phone market for the first time, cutting into its monopoly.

Ameritech has 73,000 workers worldwide in such fields as local and long-distance service, cellular, paging, Internet access and security-monitoring.

In its earnings, Ameritech reported its 18th consecutive quarter of earnings growth of 10 percent or more, excluding the charges taken.

But its cellular operations showed slower growth, adding only 168,000 customers in the first quarter, compared to 197,000 in the year-ago period. The company lowered its wireless prices to fend off the competition.

The Baby Bell is beginning to "feel squeezed by the competition and is taking prudent steps to minimize any losses as much as they can," said analyst Anthony Ferrugia at A.G. Edwards.

Ferrugia noted Ameritech's earnings have been bolstered in recent quarters more by acquisitions than growth in its core local and cellular phone businesses, requiring it to either keep up a frantic pace of acquisition or begin trimming some of the fat from certain businesses.

"One of the ways to increase your margins is to take some people out of your business," Ferrugia said. "It's not because (Ameritech chief executive Richard) Notebaert is being greedy ... it's what they and every Baby Bell is going to have to do to survive long-term."

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