Nortel Networks is slashing another 1,300 jobs on the
back of poor third quarter results.
The firm announced 2,200 redundancies last February. The 1,300
to go this time do not include the 1,200 staff yet to leave as part
of the February announcement.
Nortel CEO Mike Zafirovski said, "In September, we signaled our
view that a slowdown in the market was taking place. In the weeks
since, we have seen worsening economic conditions, together with
extreme volatility in the financial, foreign exchange and credit
markets globally, further impacting the industry, Nortel and its
customers.
"We are therefore taking further decisive actions in an
environment of decreased visibility and customer spending
levels."
Reducing costs and preserving cash are now Nortel's priorities,
he said.
The job cuts and other cutbacks - including a salary freeze -
are expected to reduce the firm's annual gross costs by around
£250m in 2009. The company's recruitment freeze will also
continue.
Nortel's sales in the third quarter decreased by 14% to £1.45bn.
Addressing the non-cash charges related to goodwill and a deferred
tax asset, Zafirovski said, "We took prudent and appropriate
actions in re-evaluating key assumptions and projections supporting
our deferred tax and goodwill assets.
"The benefit of the tax asset remains available to potentially
offset the company's future tax liability. It is important to note
that these charges have no bearing on our current cash
position."
The charges did, however, result in the company going into the
red on the balance sheet, creating a £742m operating loss for the
three months ended 30 September. There will be no preferred share
dividend.
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