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KANSAS CITY, Mo. (AP) – Faced with persistent subscriber losses and questions about its long-term prospects, Sprint Nextel Corp. is slashing its already shrinking work force by 8,000 people as it seeks to cut annual costs by $1.2 billion.

The layoffs, announced Monday, are just the latest attempt by the nation’s third-largest cell phone carrier to right its financial ship in the face of tough competition and a brutal economy. They come slightly more than a year after the company cut 4,000 jobs and closed 125 retail centers as Chief Executive Dan Hesse, then new on the job, aimed to show he was serious about streamlining operations.

Sprint said it expects the latest round of layoffs, which represent a 14 percent reduction of its 56,000 employees, will be largely completed by March 31. The company said it will take a first-quarter charge of more than $300 million for severance and other costs.

About 850 of the layoffs are voluntary, through employees taking buyouts. They will make up about $45 million of the total severance costs, the company said in a securities filing.

In addition to the cuts, Sprint said it will suspend its 401(k) match for the year, extend a freeze on salary increases and suspend a tuition reimbursement program.

“Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment,” Hesse said in a news release. “Our commitment to quality will not change.”

Sprint shares rose 3 cents, or 1.2 percent, to close at $2.49 on Monday.

The Overland Park, Kan.-based company has struggled since acquiring Nextel Communications Inc. in 2005. Technical problems, poor efforts to consolidate the two companies and stiff competition for feature-rich phones, such as the Apple Inc. iPhone on AT&T’s service, have led many subscribers to switch.

As of Sept. 30, Sprint had 50.5 million subscribers, down 3.5 million from a year earlier. The falloff contributed to the $1.18 billion net loss that Sprint posted through the first three quarters of 2008.

“Given the current state of operations, (the layoffs were) probably the right thing for them to do,” said analyst Christopher King at Stifel Nicolaus.

He doesn’t see Sprint as a bankruptcy candidate, at least not for two years. “But certainly as you get into 2011, depending on how their operations shake out over the next couple of years, there could potentially be some concerns there,” he said.

Another analyst, John Hodulik at UBS, wrote in a research note Monday that it might be difficult for Sprint to turn the tide of subscriber losses, given that nearly everyone already has a cell phone and few people switch between the major carriers.

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