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November 13, 2012
NII Holdings (News - Alert) Inc., a company that owns Nextel's wireless services across Latin America, announced last Tuesday that it will cut 20 percent of the jobs at its Reston, Virginia headquarters. Its main motive is the rising cost of employment, something not uncommon in the current economic climate in the United States.
A few of the positions that were held in Virginia will be moved over to NII's headquarters across Latin America, where the company currently has the majority of its workforce. In its announcement, NII did not mention any numbers in terms of how many people will lose their jobs. By the end of 2011, the company had less than 400 U.S. employees. Of the 15,300 people working at NII, 97 percent of them are in Mexico and South America. The sad reality is that companies are less willing to keep their employees when the cost of hiring each one rises along with taxes. The situation doesn't look so optimistic in the near future. The far future can only be speculated on, as the climate becomes more and more unpredictable.
NII's shares have dropped only a penny from $7.40 in afternoon trading after the announcement, but the stock has already lost almost two-thirds of its entire value in this year.
For example, in June, NII posted drops in its value through the previous three quarters. This is largely due to increases in competition and a large amount of unwarranted expenses. Lately, NII was in the works of investing in a new 3G wireless network for the Latin American cities it covers. This will hopefully boost sales as people see improved service in the region. As for the jobs cuts, they will cost the company approximately $8 million this quarter.
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Edited by Brooke Neuman