Telefonica SA (TEF) may cut its workforce in Spain by about 20 percent within the next three years as the country’s former phone monopoly targets growth in Latin America to make up for declining sales in its home market.
Telefonica, which employs about 35,000 people in Spain, faces a “difficult” macro-economic environment and “increased competitive pressure,” the company said in a presentation on its website today. Madrid-based Telefonica, which is cutting 6 percent of management positions, said it will link pay and benefits more to employees’ productivity rather than the consumer price index…READ MORE.
My Take: No one likes to hear about potential layoffs. Heck, in 2009 I was laid off after the FDIC shutdown the bank I worked for and sold our assets off to another regional west coast bank. Yet, I think Telefonica is doing the right thing as a company. This news story tells me they are committed to their dividend distribution (and growth) and understand that their future potential rests in the lands of South and Central America.
The bottom line is that a company can have a great product/service, but without good management they are either doomed or stuck in the land of mediocrity. The story above does not paint such a picture in my mind. Whether they cut the full 20% or not is not all that important to me. The important thing is that management carries this through and implements their strategic initiatives.
I would watch TEF for stock price weakness. Buy on the dips wouldn’t be a bad strategy. Again, research is key.
Disclosure: No Position