Nortel to Cut 4,000 Jobs
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