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Employment

Nortel Details Layoff Plans

Nortel Networks Ltd. (NYSE/Toronto: NT) today fleshed out its staff reduction plans by announcing that 3,250 posts will be cut, down from the expected 3,500 (see Nortel Cuts 3,500 Jobs). North America is hit the hardest, accounting for more than 70 percent of the cuts (see Nortel Provides Status Update).

Giving approximate figures, Nortel says 1,400 jobs will be cut in the U.S., about 950 in Canada, 650 in the EMEA (Europe, Middle East, and Africa) region, and the remaining 250 job cuts are described as "other." This doesn't mean Asia/Pacific and Latin America though. A Nortel spokesman says the company is not breaking down the details of those jobs any further at present, and they could impact any geographic region.

Two thirds of those affected, about 2,170, will get their slips by the end of 2004, while the rest will be notified by June 30, 2005. The cuts mean that about 2 million square feet of "occupied space" will be freed up as remaining staff locations are consolidated, and the company is set to auction off its empty buildings by the end of 2005.

The vendor now believes the overall cost of these rationalizations will total $450 million, an increase from the previous estimate of $300 million to $400 million. The costs comprise $220 million for the job cuts and $230 million from the "real estate actions." About 35 percent of the total costs will be booked in 2004 and the rest in 2005.

The company says the costs are higher than previously thought because of "more extensive real estate actions which are expected to result in increased longer term cost savings."

Previously Nortel said it would save between $450 million and $500 million a year as a result of the cuts. Now it says it will save $500 million in 2005, and then more each year after that.

Nortel has also obtained a new defaults waiver from Export Development Canada (EDC) regarding the EDC's $750 million support facility. The waiver is until October 31, or earlier if Nortel files its outstanding financial reports with the Securities and Exchange Commission (SEC). Those reports are still expected to be filed before the end of October (see Nortel Restates Delay of Restatement ).

Nortel's share price is up 1 cent to $3.52 this morning, valuing the company at $14.7 billion.

— Ray Le Maistre, International News Editor, Light Reading

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marete 12/5/2012 | 1:13:57 AM
re: Nortel Details Layoff Plans
It's too bad Nortel always resorts to layoffs in order to solve its internal problems. Will these layoffs ever come to an end?
dljvjbsl 12/5/2012 | 1:13:57 AM
re: Nortel Details Layoff Plans There are local reports in Ottawa that the Canadian layoffs will be concetrated in R&D and in Ottawa
fiber_r_us 12/5/2012 | 1:13:57 AM
re: Nortel Details Layoff Plans > Will these layoffs ever come to an end?

In about 30,000 more layoffs.
dljvjbsl 12/5/2012 | 1:13:54 AM
re: Nortel Details Layoff Plans 750 of the 950 Canadian layoffs will occur in Ottawa. Ottawa will remain the international R&D center.

Is this the end of the line for optical R&D in Ottawa?

My favorite analyst quote from the bubble. In discussing the prospects of a VoIP company he said "Afterall this is not optical networking..." My favorite analyst is quoted today in Canadian newspapers discussing Nortel's prospects. Why anyone would listen to such fools is beyond me.
edgecore 12/5/2012 | 1:13:53 AM
re: Nortel Details Layoff Plans Timing is everything, Huawei in Ottawa just posted 8 jobs looking for Datacomm as well as wireless people.

EC
LightMan 12/5/2012 | 1:13:52 AM
re: Nortel Details Layoff Plans but who wants to work for Huawei? I'm sure even unemployed folks in Canada still want to hold their heads high with integrity - jobless or not.
Balet 12/5/2012 | 1:13:51 AM
re: Nortel Details Layoff Plans I have seen a Huawei's facilities in Silicon Valley a few times. Pitty! Much worse than even Oplink or 99% of asian companies in USA.
People were also gloomy...
PO 12/5/2012 | 1:13:51 AM
re: Nortel Details Layoff Plans It's too bad Nortel always resorts to layoffs in order to solve its internal problems. Will these layoffs ever come to an end?

Has anyone actually said that these layoffs are going to solve any of Nortel's internal problems? The original announcements made it clear that the biggest challenge currently facing the company is in their underlying cost structure (and not in the mfg cost, either). But to the extent that these layoffs shrink the revenue projections as quickly as the expense lines, those structural problems remain: productivity isn't improved just by shrinking the company.

I still haven't seen the execs make the tough calls to readjust salaries back in line with what has happened across the industry, and I don't see how those excessive costs can be corrected any other way.

I feel very sorry for all of the employees who have been suffering because of these layoffs and the uncertainties in the future.
dodo 12/5/2012 | 1:13:50 AM
re: Nortel Details Layoff Plans " still haven't seen the execs make the tough calls to readjust salaries back in line with what has happened across the industry, and I don't see how those excessive costs can be corrected any other way."

I don't believe that this will ever happen. Most of the ELT and some of the other management folks are @ Norty only because of the money - salary and comp. included. Why do you think 9 beancounters got caught with both hands in the cookie jars and had to get axed? Apart from ensuring that all accounting rules are respected and the risks for financing or factoring are "legit", what other skills do they have for Norty to retain them and reward them with 6 figure bonuses. Some of these guys think TOO HIGHLY of themselves and that's why when they are out, they tend to stick to their clique or else their world does crumble.

Unfortunately it is the employees or staff who get the pink slip because SG&A and salaries are "too costly" for the corporation based on the annual revenues. Just have too watch some of the VPs and ELTs, they are already palnnning and calculating their forthcoming comp assuming q4 will be better than anticipated. The BOD and the comp committee have to do their JOB .

Just my 2 cs
dljvjbsl 12/5/2012 | 1:13:48 AM
re: Nortel Details Layoff Plans i in 8 Ottawa R&D employees will be laid off.

This is a major blow to the entire Ottawa R&D sector. The number laid off is more than any other R&D operations in Ottawa has employed.
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