Although some good news is coming out of the latest round of quarterly financial reports, many telecom companies are still cautious. Nokia, Digex Inc. and Tut Systems Inc. are reducing their staffs to pare expenses as demand continues to wane.
Nokia plans to shed 900 jobs from its networks division by the end of the year. The market for telecom infrastructure remains week, and Nokia is making the cuts to better align the organization with current demand. The cuts, which will affect employees in Nokia's network delivery and maintenance functions, will be spread out among employees around the world, Nokia said. The company did not outline how much it would save as a result of the headcount reductions.
Trying to distance itself from scandal-ridden WorldCom Inc., Digex Inc. is taking steps to become financially independent. The managed service provider is reducing its staff by roughly 200 people. The 20 percent staff cut is designed to align expenses with revenue. Affected employees will receive a severance package based on their time with the company. The cuts will be completed by the end of the week.
In June, Digex laid off 86 employees, and put George Kerns at the company's helm. WorldCom owns 61 percent of Digex shares and has a 94 percent voting stake in the company. Digex, however, insists that its cost cutting measures are not related to WorldCom's troubles.
Tut Systems Inc. is cutting a bit deeper than Nokia or Digex, with a planned reduction of 39 percent of its work force. The cuts will mainly take place in Tut's engineering, operations and general and administrative departments. In addition to the layoffs, the company plans to shut its Bridgewater, N.J. design center. Theses actions will bring Tut between $5 million and $6 million in annual savings. During the third quarter, Tut will take a $1.6 million charge — $0.5 million for severance packages and $1.1 million to close the design center. The VDSL systems provider said it has the financial resources to operate beyond the next 12 months.
The company says it remains committed to its line of products, including the Expresso, IntelliPOP 5000 and IntelliPOP 8000.