Nortel to Cut 2,900 Jobs2/07/2007 4:45 AM Eastern
Ailing Canadian network-equipment maker Nortel Networks announced that it will eliminate 2,900 jobs and shift another 1,000 positions to lower-cost locations as part of a strategic overhaul.
The company estimated that job reductions and other steps would generate annual savings of up to $400 million.
“These are tough but necessary measures, and we recognize the impact they will have on affected employees,” chief executive Mike Zafirovski said in a prepared statement.
Zafirovski was hired in November 2005 and has since announced a series of initiatives to reorganize the company, cut costs and lift sales.
The latest round of job reductions is Nortel’s second within the past year. Last summer, Nortel said it would cull 1,100 jobs and end its defined-benefit pension plans for North American employees. The company ended 2006 with about 34,000 employees.
Nortel's latest overhaul was unveiled one day after the company announced that chief financial officer Peter Currie would resign after two years on the job. Nortel said Currie decided to leave on his own.
Like other equipment vendors, Nortel has suffered from sluggish growth since the end of the Internet boom in 2001. A major accounting scandal in 2004 also set the company back in its effort to recover.
In related news, Nortel said fourth-quarter revenue is expected to total about $3.26 billion, up 8% from the previous year. The company was expected to generate about $3.21 billion in sales, according to the consensus of analysts surveyed by Thomson Financial.