My condolences to the employees and their families at Nortel.
Article below:
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AP
Nortel Cutting 2,900 Jobs
Wednesday February 7, 11:49 am ET
Nortel to Cut 2,900 Jobs Over 2 Years in Cost-Cutting Effort
TORONTO (AP) — Canadian telecom equipment maker Nortel Networks Corp. said Wednesday it plans to cut 2,900 jobs, or about 8.5 percent of its work force, over the next two years in an effort to cut costs.
The job cuts, 70 percent of which will occur this year, and other cost cutting measures are expected to save about $400 million a year, with about half the savings realized in 2007.
The company also plans to shift about 1,000 positions from higher-cost to lower-cost locations, with about 40 percent of this taking place this year.
Nortel said its new business model requires a “significant reduction” in administrative expenses, but added its research and development investments, while reduced, will be maintained at 15 percent of total sales.
The company added it is also cutting costs by reducing its global real-estate portfolio.
The cost of these actions could be as high as $390 million, the company said, with about $300 million related to the job cuts and the rest to real estate reductions.
Nortel Networks’ U.S. shares rose 99 cents, or 3.8 percent, to $26.92 on morning trading on the New York Stock Exchange.
Wednesday’s news follows last June’s announcement of an 1,100-position reduction in Nortel’s global work force, cutting 1,900 jobs while adding 800 at new operations centers abroad.
The latest announcement came one day after Nortel disclosed that chief financial officer Peter Currie will resign effective April 30, with no successor named.
“We are transforming Nortel and are focused on building a highly competitive organization that drives innovation and profitable growth,” CEO Mike Zafirovski said in a statement Wednesday.
“Every effort will be made to leverage normal attrition and redeploy affected employees to other areas of the company,” he said.
Nortel also disclosed that it expects to report fourth-quarter revenue of $3.26 billion, up 8.8 percent from a year earlier, with a gross profit margin “slightly above 40 per cent of revenue.”
Nortel, which will issue its 2006 results later this month, said it held $3.5 billion in cash at year-end, including $300 million from the sale of its UMTS access business to Alcatel-Lucent.
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