Nortel cuts jobs, updates outlook, shuffles execs
Nortel Networks Corp. will cut about 20,000 more jobs through layoffs and divestitures, and show a $3.6 billion net loss in the third quarter. It also announced new key management.
The Brampton, Ontario, company started the year with 94,500 employees, and was down by 30,000 by the end of September, spokesman David Chamberlin says. It expects to cut another 10,000 by the end of the month and will lose another 10,000 workers through divestitures, some of which have already occurred, he says. The company will have 45,000 workers after the layoffs and sales.
Nortel's work plan calls for it to re-focus on three areas — optical long-haul networks, wireless networks and metro networks — prompting it to divest noncore businesses.
The company has sold its interest in several businesses, including one this morning, where C-MAC Industries Inc. will purchase most of Nortel's DMS-related manufacturing activities — including systems integration, configuration and testing of the DMS circuit-switching products — in Nortel's North Carolina facility in Research Triangle Park. Nortel says it also plans to sell similar manufacturing activities in its Monkstown, Northern Ireland, facility to C-MAC.
Nortel yesterday announced it would sell its Clarify assets to Amdocs Ltd. for about $200 million in cash, and it sold its controlling interest in Matra Nortel Communications Distribution, its French distribution and services company, to SPIE.
The company has divested other businesses since early August, when it transferred its interest in Arris Interactive to Arris Group Inc. It also set up outsourcing agreements such as one it has with SCI Systems that calls for Nortel to outsource its printed circuit board assembly activities.
The transactions should pull in about $700 million in cash, most of which will come in over the next two quarters, Nortel says.
"It's all part of the work plan," Chamberlin says.
Nortel also notes it expects an after-tax net loss of about $3.6 billion on revenue of $3.5 billion in its third quarter.
Finally, the company announced that CFO Frank A. Dunn will replace John A. Roth as president and CEO. Terry Hungle, former president of finance for Nortel Networks Americas, is the new CFO; Frank Plastina is president of Metro Networks; Greg Mumford is president of the optical long-haul networks unit; and Pascal Debon is president of the wireless networks division.
Chahram Bolouri continues as president of global operations, Gary Donahee stays as president Americas; Stephen Pusey is president EMEA; Masood Tariq continues as president of the Asia-Pacific unit; and Kannankote Drikanth stays as president of Global Professional Services.