Nortel, Alcatel Cutting Back More

The optical sector is being hit hard once again, as two of its heavy hitters — Nortel Networks and Alcatel — announce major staff cutbacks.

After Tuesday’s market close, Nortel said it would post a $3.6 billion loss in the third quarter and lay off an additional 20,000 workers, as it replaces its chief executive officer (CEO) with its current chief financial officer (CFO).

Nortel said half of the 20,000 cuts would come via the divestiture of some businesses, while the other half would come through layoffs that will occur by the end of October.

When all is said and done, Nortel will have about 45,000 employees. That’s less than half of the 94,500 workers it had at the start of 2001, according to Reuters.

The company also lowered its third-quarter revenue forecast to $3.5 billion, which falls short of analysts’ estimates of $3.9 billion to $4.6 billion, according to press reports. Nortel also said its Q3 net loss would come in at $3.6 billion or $1.13 a share loss. The company’s pro-forma loss will be at $910 million or $0.29 a share — numbers that also fall below analysts’ expectations as reported by Thomson Financial/First Call. A consensus of analysts’ expectations for Nortel came in at a loss of $0.21 a share, before Tuesday’s announcement.

Nortel has been cutting jobs, jettisoning businesses and slashing costs as it tries to climb back into the black. The company said it will announce its Q3 results on October 18, 2001.

In addition, company CEO John Roth will step down on Nov. 1, officials also said. He had been planning to retire in the spring of next year. Roth will stay on as vice-chairman through the end of next year.

Nortel CFO Frank Dunn will step up to the CEO position, while former president of finance Terry Hungle will take Dunn’s place.

French telecom equipment concern Alcatel , meantime, announced plans to cut about one-third of its staff by the end of next summer, as economic conditions continue to slide.

Alcatel said it would cut about 300 positions from its optical fiber site in Claremont, N.C., which employed 1430 people at end September 2001. Additionally, “adaptations” to the workforce will be implemented in the company’s French undersea network and optical fiber sites, and positions reduced in the undersea network site in Greenwich, UK.

The company has also decided to shift its undersea cable production site in Port Botany, Australia to “standby mode” by mid-2002.

These measures, combined with the closing of the undersea cable plant in Portland, Ore., announced in May, represent a reduction of 2151 positions (48%) in Alcatel’s undersea network activity worldwide workforce. They also correspond to a reduction of 887 positions (17%) in Alcatel’s optical fiber activity worldwide workforce. In total, 3038 positions will be reduced from a worldwide workforce of 9320 in these two activities.

Most of these measures will be completed by summer 2002.

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