Nortel to lay off 3,250 staff worldwide

Nortel Networks will lay off about 1,400 employees in the US and about 950 in Canada, with those employees to be notified by the...

Nortel Networks will lay off about 1,400 employees in the US and about 950 in Canada, with those employees to be notified by the end of June 2005.

The company also will cut about 650 positions in the Europe, Middle East and Africa region and 250 elsewhere in the world.

The layoffs are less than the company forecast in August when it announced plans to cut 3,500 employees.

Nortel expects to notify about two-thirds of the employees by the end of this year and the rest by 30 June.

The disclosures came in a regular biweekly filing to the Ontario Securities Commission, which is investigating Nortel's restatement of its financial results for periods going back as far as 2001.

The company is also under investigation by the US Securities and Exchange Commission regarding the restatements, which took place against the backdrop of the telecommunication industry's downturn. Nortel fired its president and chief executive officer, Frank Dunn, and other executives in April. Two weeks ago it disclosed that it expects its 2004 revenue growth to lag the industry.

In addition to the layoffs, Nortel's "work plan" for reducing costs includes a voluntary retirement program, real estate cutbacks and other moves. The real estate changes will involve cutting back on space at many facilities rather than leaving any facilities entirely, according to spokeswoman Tina Warren.

The work plan is expected to deliver cost savings of about $500m (£280m) in 2005 and greater savings in subsequent years, according to the filing.

But it will also bring charges to Nortel's income statements of about $220m for layoffs and $230m for real estate. About 35% of those charges should be incurred in 2004 and the remainder in 2005.

For competitive reasons, Nortel will not break down the layoffs by department, Warren said.

The cuts are focused to protect sales and customer-facing jobs and to keep up product development at the company, according to the statement. When the cuts were announced in August, new president and chief executive officer Bill Owens said they would mainly affect middle management.

Stephen Lawson writes for IDG News Service

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