Nortel cuts 10,000 more jobs; issues warning
Nortel Networks' dismal second-quarter update says it will lay off another 10,000 workers by the end of September, suspend dividend distribution after June 29 payments and show a high-than-expected loss.
The company says it also will discontinue certain access operations, including its narrowband and broadband access solutions, over the next year.
The company had already announced 20,000 job cuts by the end of second quarter, and said it would close some locations in April, a moved expected to save $875 million per quarter.
Nortel expects revenues from operations of $4.5 billion, with a net loss from operations of $1.5 billion. With the operations outlook and impact of its alignment plan, Nortel says it expects a net loss of about $19.2 billion.
The company cited dwindling capital expenditures in the market and a "very significant reduction" in equipment purchases, from both first-quarter and a year ago.
Nortel also announced new agreements for $2 billion in credit from affiliates of J.P. Morgan Chase & Co. and Credit Suisse First Boston. The unsecured credit allows borrowing by Nortel Networks Ltd. and Nortel Networks Inc., with a term of 364 days, Nortel reports. Borrowers can then extend repayment for a year.