RealTime IT News

Nortel Parts with 7,000 Workers

Anticipating lower revenues for its third fiscal quarter, telecom equipment giant Nortel Networks late Tuesday laid off an additional 7,000 workers to break even in a time when U.S. service providers continue to keep their wallets in their pockets.

When the layoffs are completed by the end of the fourth quarter of 2002, Brampton, Ontario's Nortel will have 35,000 workers -- down from the 95,000 it employed in December 2000 before the spending glut by ISPs and phone companies took effect. The company will also close certain undisclosed facilities.

Frank Dunn, president and chief executive officer of Nortel Networks, said he expects Q3 revenues to be "lower than second quarter 2002 revenues by up to approximately 10 percent, compared to our previous view of 'essentially flat'."

Noting that his company's main goal is to return to profitability by the end of June 2003, Dunn added that Nortel is working to further reduce quarterly breakeven cost structure to below $2.6 billion.

"This compares to our previously stated quarterly breakeven cost structure, on the same basis, of approximately $3.2 billion," Dunn said. "Our focus will be on simplifying the structure around our three businesses and ensuring that a more direct connection exists between our operations and customer facing teams. This approach will allow us to be even more responsive to our customers' needs, while reducing our cost structure."

The troubles Nortel faces are not its own, as rival infrastructure providers Cisco and Lucent were also battered by the slash in spending by telecommunications providers whose eyes were bigger than their stomachs in 1999. Since that time, several telcos have filed for Chapter 11 bankruptcy filing or are facing charges of accounting improprieties.