Jobs will be cut in all divisions, including the wireless and long-distance units.

The company hopes to generate steady cash from the long-distance unit, and analysts say that may prove fruitful.

Shares of Sprint FON, Sprint's main long-distance unit, rose 56 cents, or 4.79 percent, to $12.26 on the news.

Painful Stumbles As Mr. Armstrong says, the problems in his company's long-distance unit are systemic and not likely to change.

In fact, Sprint's wireless business could be at least as attractive to Mr. Ebbers as is Sprint's long-distance unit.

One way out of this quandary would be to sell Sprint's long-distance unit to another company that could generate similar cost savings.

The company's newly formed long-distance unit, Bell Atlantic Communications Inc., said it expected to enter each state as it got approval from regulators, which could take several months.

One reason AT&T may want to issue a new stock to track the long-distance unit is that its shares have languished recently.

I received a more elaborate explanation from Gary Morgenstern, a spokesman for AT&T's long-distance unit.

The long-distance unit could be put into some sort of trust, perhaps, until the Bell won entry into the long-distance market.