Nortel to Cut 4,000 Jobs

Nortel Networks Corp. (NYSE/Toronto: NT) has announced that roughly 4 percent of its workforce will be terminated in 2001.

Early today, Nortel refused to confirm news of hundreds of layoffs reported in Canada's Ottawa Citizen and Globe and Mail newspapers and on the CBC broadcasting network. Subsequently, specific publications were informed that indeed 1,000 employees in the Toronto area had been laid off. Finally, late today, Nortel issued a revised statement -- again, sent to selected publications by email but posted on the company Website -- stating that "approximately 4,000 regular full time positions will be eliminated in the near term through streamlining and realignment activities."

Light Reading first heard of layoffs a week ago, via a posting on its Nortel message board (see Nortel Layoffs). However, we were unable to get confirmation from Nortel at the time.

"There's definitely a layoff going on here," one Nortel employee told Light Reading on condition of anonymity. The employee said the layoffs seem to be the result of Nortel's many acquisitions over the past couple of years, which have resulted in duplication of jobs companywide.

Part of Nortel's problems delivering its news, insiders say, is that Jeff Ferry, the company's director of strategic media relations, left Nortel over two weeks ago to join Yafo Networks, a startup specializing in optical networking subsystems.

Nortel says the job retrenchment will help the company achieve "a laser-like focus" on its most profitable businesses, which it says are optical, wireless and local Internet, and e-business.

Analysts say the layoffs reflect Nortel's concerns about keeping its business in tune with trends. "The layoff appears to be in line with discussions they've previously had about reducing the numbers and trimming manufacturing in older technologies, like voice circuit switching," says David Heger, analyst with A.G. Edwards. He says Nortel wants to focus on improving its overall cost structure and gross margins.

Nortel's been suffering for months from the bearish backlash of the public markets. Its stock price dropped after earnings failed to meet expectations in October (see Nortel's Optical Halloween). And even though there's been an overall market trend downward (see Optical Market Falls Seven Percent ), it's been said that Nortel needs weeding in several areas, including sales (see Nortel Bashing Continues).

Nortel was trading at 34.06 late today, up 2.13 (6.65 percent).

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

stout4555 12/4/2012 | 9:02:10 PM
re: Nortel to Cut 4,000 Jobs >>why do companies go to such trouble to silence news about staff cuts, especially in a slowing economy when such news is more or less expected?

It may be expected but no one on Wall St. really wants to hear it, not in this market environment. You could also make a case for not wanting employees to fear for their jobs, I guess when you get to work and your buddy Joe is no longer there, it becomes fairly obvious.
BlueSkies 12/4/2012 | 9:02:06 PM
re: Nortel to Cut 4,000 Jobs It is a ritual that Nortel goes through every 3-5 years. Am an ex-Norteler.
BASSWOOD 12/4/2012 | 9:01:51 PM
re: Nortel to Cut 4,000 Jobs Anyway, Cutting off those redundant positions is the only way to live better in the "Wild Zoo".

BASSWOOD 12/4/2012 | 9:01:51 PM
re: Nortel to Cut 4,000 Jobs Anyway, Cutting off those redundant positions is the only way to live bette in the "Wild Zoo".

BASSWOOD 12/4/2012 | 9:01:51 PM
re: Nortel to Cut 4,000 Jobs Anyway, Cutting off those redundant positions is the only way to live bette in the "Wild Zoo".
BASSWOOD 12/4/2012 | 9:01:50 PM
re: Nortel to Cut 4,000 Jobs SAD BUT TRUE & NOTHING ELSE MATTER
Jo 12/4/2012 | 9:01:17 PM
re: Nortel to Cut 4,000 Jobs Nortel's basically cutting the dead weight- product lines and employees.

When you are 90,000+, you are bound to get your fair share of underperformers. This past Friday a VP told us to expect pink slips for the "passengers" as he worded it. And we are in the area where they can't hire enough and attrition is draining the knowledge base...

SPARKLE 12/4/2012 | 9:00:32 PM
re: Nortel to Cut 4,000 Jobs JO is completely right. People should read the fine print, Nortel cut 4-5K, has 85k now and is on track to have 93K+ (minus those gained through aquisition) by years end. At the pace the giants need to hire to stay even a brief jump ahead of start-ups, they don't have the luxury to hire "100%'s" but must hire as best as possible as quickly as possible, weed out at the end. I'm glad our smaller company doesn't have such a heinous CODB with HR.
rafaelg 12/4/2012 | 9:00:30 PM
re: Nortel to Cut 4,000 Jobs The scenario:

1.-Large CO's buy small start-ups.

2.-Large CO's have under-performers as well as the start-ups.

3.-Large CO's dump ballast to rise.

4.-Large CO's swallow ballast on intake.

There are many types out there looking for jobs. Those that are currently employed, and those that are not. Watch out for a rapid rise in the latter within the next few months as large CO's trim the fat!!

We all know who the FAT is in our jobs!!!
I give credit to a company that has the guts to get rid of the ballast!!!
triton 12/4/2012 | 8:59:56 PM
re: Nortel to Cut 4,000 Jobs Those of you who think NT is just laying off poor performers are naive.

Most likely is that NT is cutting divisions that are related to development and production of products that don't have any future. Consider the modern structure of the large networking companies. They don't internally develop their new products, they buy small companies that develop a product or product line. When this product / product-line reaches its eventual end, (networking never stands still), what do you think will happen?

If you are in a company that has been purchased by a big player, then this is really something you should be watching for.

Good people are the vast majority in these layoffs, good people like yourselves. For those
of you who think this can't happen to you, I will go out on a limb and guess that you haven't been in the job pool for very long ;-)

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