Nortel cutting 2,100 jobs
'It is a challenging environment': president-CEO
High-tech equipment maker Nortel Networks said Wednesday it is cutting 2,100 jobs and will transfer 1,000 other jobs to lower-cost countries.
Nortel did not provide a breakdown of the job cuts, but the majority of them will be in North America.
"It is a challenging environment," company president and chief executive officer Mike Zafirovski said during a conference call. "There is pressure in North America, particularly on the carrier side."
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The company currently employs 6,800 people in Canada and 11,900 in the United States. Its global workforce numbers 32,550.
Company spokeswoman Ann Fuller stressed that Nortel remains committed to Canada, with its headquarters in Toronto, and its Ottawa research and development hub.
Wednesday's job cut announcement is the second by the company in its latest round of restructuring. In February 2007, Nortel announced the elimination of 2,900 jobs and the transfer of another 1,000 to cheaper regions.
"Essentially, we need further reductions to have a cost structure in line to compete and win globally," Fuller told CBC News.
Nortel said the cuts are expected to save the company $300 million US annually, while it will take a $275-million charge against its earnings. Roughly 70 per cent of the charges are expected to be incurred in 2008 and the remainder in 2009.
In conjunction with the job cut announcement, Nortel said it lost $844 million US, or $1.70 per common share, in the fourth quarter, due to a $1.06 billion charge related to tax changes in Canada. In the same quarter of 2006, Nortel lost $80 million US.
The company said revenue in the fourth quarter was $3.2 billion US, down four per cent year over year, adding that it expects 2008 revenue growth to be in the low single digits.
Nortel had previously slashed its workforce — by about 60,000 jobs in six years — after the dot-com bubble burst and it went through an accounting scandal.
Shares of Nortel — which were consolidated 10-for-one in December 2006 — fell more than 13 per cent in the wake of the report. The stock closed down $1.53 at $9.68 on the TSX.