Nortel cuts jobs, shakes up management

By Scott Moritz

Nortel (NT) plans a major restructuring and another round of job cuts as demand for tech gear plunges.

The Toronto networking equipment giant said Monday it would trim 1,300 jobs on top 1,200 cuts previously announced. Nortel had 32,550 employees at the end of 2007.

The company also said four top executives, including its head of sales and its chief technology officer, would leave at year-end.

The news comes as Nortel posted third quarter earnings that met lowered targets. The company warned, however, that 2008 sales would fall 4% — at the lower end of its previous guidance of 2% to 4%.

Like other tech shops that have lowered forecasts, including Qualcomm (QCOM), Cisco (CSCO), Microsoft (MSFT) and Intel (INTC), Nortel cited a sudden slowdown in orders that started in September and has shown no signs of letting up. Corporate spending cuts, tight-fisted phone companies and a weaker consumer demand have sent the tech sector into a deep slump.

In September, Nortel slashed guidance and said it would look to sell or eliminate some business units. The news shocked investors who sent the stock down 43% in a one-day selloff Sept. 17.

In addition to plans to cut a total of 2,500 jobs, Nortel has shuffled its management. Marketing chief Lauren Flaherty, technology chief John Roese, head of global services Dietmar Wendt and head of sales Bill Nelson will leave the company at the end of the year, Nortel announced.

For the third quarter, Nortel took a one-time charge of $3.2 billion ($2.1 billion in writedowns for tax adjustments, and $1.1 in goodwill charges) putting the net loss at $3.4 billion, or $6.85 a share. Excluding those charges, pro forma profit was 30 cents a share, well below the 8-cent adjusted profit last year but in line with analysts expectations.

Sales for the third quarter were $2.3 billion, down 15% from year-ago levels but meeting Wall Street expectations.

Looking ahead, Nortel cut its full year sales projection to about $10.5 billion or about 4% below 2007 levels. Analysts had anticipated a 4% full year slide in sales for Nortel.

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Nortel has made too many abrupt changes over the past decade. In current times the technology value has declined due to economy, not interest. These changes that have occurred plague Nortel. Changes to be made will involve yet another strategy. Nortel will need a stronger business strategy from within.

Posted By David Morris Eustace, Tx : November 11, 2008 10:40 am

Shuffled management?

They fired practically the whole management team that was brought in over the past three year.

Posted By Steve M – Avon, NJ : November 10, 2008 5:39 pm

I don’t understand the last comment, to be honest. Nortel is the Canadian equivilent of Cisco. They’ve had a rivalry for years. Prior to 2001, Nortel commercials were as prealent as just about any other tech company’s. Since then, they’ve disappeared from the advertising landscape. Regretfully, like so many other companies of the time. But the thing about this article is that it clearly says a major tech company, although it’s in Toronto, Canada, is suffering significantly enough to let go of at least 2 major officers, cut over 1,000 employees (from what departments and levels though? R&D, Admin, ??) and are warning lower profits still for next year. This clearly says to me, at least, that the Tech industry may be the next indusrty to go into recession. At least as far as supplying new products which there’s a demand for. This is a bit counter to those U.S. companies that were saying during the Summer that there is no Tech Spending slow down. Well, here it is. How long’s it going to stay is the next question. Are Nortel’s products too expensive? Could the company be taxed at a higher rate? Should they be? All good questions. But I don’t think lowering a million dollar (multi at one time) company’s corporate taxes will do much to help it if they still can’t sell actual product and support.

Posted By Chuck, NY, NY : November 10, 2008 3:52 pm

this is not in USA,,,,, AND MAYBE YA THINK TECJ GEAR IS FOR MORE WEALTHIER PEOPLE ? ? ? ….SEE TAX THE RICH MORE !!!! DUMMYS

Posted By JOHN, NY : November 10, 2008 2:18 pm

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