Nortel Networks is axing 1,900 jobs around the world to help reduce costs and improve margins.
The company will also make changes to its pension plan to help cut costs. Although 1,900 jobs are going, the company will also create 800 new jobs in low-cost countries including Mexico and Turkey.
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Nortel lost $2.6bn (£1.48bn) last year and is still recovering from a financial scandal which saw it having to restate its accounts for a number of years.
The job cuts and other restructuring costs are expected to cost the Canadian company $100m over two years. Nortel said the changes would save it around $100m in 2007, and $175m by 2008.
In the last six years, Nortel’s headcount has shrunk from 90,000 to 35,000 after successive job culls.
News of the restructuring, including a new formula for the company’s North American pension plan and cuts to healthcare arrangements, led to a fall in the company’s stock on the New York Stock Exchange, as analysts were left unconvinced about any positive effect of the changes.