Nortel Loses $844 Million, Plans More Job Cuts - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Nortel Loses $844 Million, Plans More Job Cuts

Some 2,100 jobs are targeted for elimination and an addition 1,000 positions will be shifted overseas, the company said.

The downsizing agonies are continuing at Nortel Networks as the networking company reported a sharp increase in net losses of $844 million for its fourth quarter and another 2,100 in job cuts.

The company has been relentlessly downsizing in the wake of an accounting scandal; its workforce numbered nearly 95,000 in 2000 and had slipped to 32,500 by the end of the last quarter. In addition to the 2,100 jobs slated to be eliminated now, Nortel said it will shift another 1,000 employees to "higher growth and lower cost geographies" like China and India.

It's small consolation, but the company has plenty of company as other networking firms including Motorola, Ericsson, and Alcatel Lucent have also been downsizing as carriers have cut orders in anticipation of delivering a new generation of wireless infrastructures.

Nortel's revenue dropped to $3.2 billion in the quarter -- a drop of 3.7%. A whopping $1.04 billion tax-related charged heavily impacted the quarter's results.

Nortel president and CEO Mike Zafirovski said there were some bright spots in the quarter, namely improvements in growing technologies like VoIP, WiMax, and CDMA infrastructures.

"In a period of significant change for our industry, we have now reported six consecutive quarters of strong year over year improvement in operating margin," Zafirovski said in a statement. "Although our fourth quarter operating margin was below target, it is the highest in 12 quarters."

Still, the work force reduction was necessary as the industry continues to suffer from too much competition and constrained revenue streams.

"It is a challenging environment," Zafirovski told analysts during a conference call. "As a result of it, we came at the lower end of our previous revenue guidance."

The Canadian firm's stock plunged 15% on the news Wednesday.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

Pandemic Responses Make Room for More Data Opportunities
Jessica Davis, Senior Editor, Enterprise Apps,  5/4/2021
10 Things Your Artificial Intelligence Initiative Needs to Succeed
Lisa Morgan, Freelance Writer,  4/20/2021
Transformation, Disruption, and Gender Diversity in Tech
Joao-Pierre S. Ruth, Senior Writer,  5/6/2021
White Papers
Register for InformationWeek Newsletters
2021 State of ITOps and SecOps Report
2021 State of ITOps and SecOps Report
This new report from InformationWeek explores what we've learned over the past year, critical trends around ITOps and SecOps, and where leaders are focusing their time and efforts to support a growing digital economy. Download it today!
Current Issue
Planning Your Digital Transformation Roadmap
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
Flash Poll