RealTime IT News

Nortel To Cut 10,000 Jobs By 2002

Canadian equipment manufacturer Nortel Networks Inc., told investors Thursday it will layoff 10,000 employees in 2001, the end result of what officials call a faster and more severe U.S. economic downturn than originally expected.

The company also said it was revising its 2001 forecast, a nearly 50 percent drop in revenue and earnings growth.

Of the 10,000 employees, 6,000 have already been notified. Nortel officials expect to reach their reduction goals through normal attrition by the end of the year.

John Roth, Nortel president and chief executive officer, said the reductions are necessary in a U.S. market currently going through a downturn.

"While we previously noted that economic uncertainties and capital constraints were impacting our outlook, we are now seeing a faster and more severe economic downturn in the United States which we now expect will result in a lower overall market growth of approximately 10 percent in 2001," Roth said.

But, Roth maintained, his company is still well positioned to remain an industry standard in the sale of Internet mainstays like optical and wireless routing equipment.

"Even with the current economic and market uncertainty, we continue to believe that Nortel Networks, with our global reach and industry-leading portfolio, is ideally positioned to gain market share and continue to grow revenues faster than the overall market growth rate," he said.

Despite such reassuring words, the company took a hit after the announcement, which was released after the bell. Nortel , trading on order-matching system Instinet, took a $5.75 per share hit from its $29.75 per share close on the New York Stock Exchange.

The news comes hours after Dell Computer announced its intended staff cuts -- numbering 1,700 -- signaling the end of the '90s Internet bubble and the beginning of the new millennium's grim reality.