Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David Barden – Bank of America Securities
David Barden – Bank of America Securities
You talked about a 20% year over year annualized costs savings by year end that would be around $2 billion, $1.2 billion from the labor and presumably $800 million from incremental customer care and other efforts. I was wondering if outsourcing network management was part of that puzzle.
Second, related question is with those $2 billion of run rate annualized savings you seem increasingly comfortable with the cash versus debt situation. Do you deploy the cost savings to a combination of more aggressive pricing and marketing efforts to get back on the market share footing or do you continue to put that money in the bank to continue to build cushion on financial security.
Bob Brust
The 20% reduction in costs referred to our labor costs. That’s approximately $1.2 billion on an annualized basis for the year. What was the second part of your question?
David Barden – Bank of America Securities
It would be helpful to understand do you anticipate outsourcing network management to be an incremental cost savings and as you deploy cost savings to debt maintenance pricing and marketing efforts how do you prioritize those?
Bob Brust
We’re looking at every available way to reduce costs and have made no decision in that area yet. When and if we do we will inform you. We do constantly look at outsourcing and during the fourth quarter we did do a small outsourcing in real estate and things like that and we will do that as appropriate when it makes sense. The other ones we have not made a decision on.
David Barden – Bank of America Securities
On allocating those savings to debt price and marketing?
Bob Brust
Our first priority is to not have any problems with our debt as you know and we will constantly make sure that we can make our maturities. We look at that on a three year period and do our planning. Our number one priority as Dan mentioned is getting our subscriber losses down during this year and will allocate all of the funding that’s required to do that. We did do that, you saw in the fourth quarter we allocated a lot of money to increasing our marketing efforts which you’re probably seeing in ads. We’ll do that as required.
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