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MemoWatch Nortel ‘re-aligns’ 10,000 employees

Six point plan to oblivion

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Networking equipment monolith Nortel is in big trouble. The Canadian company recently announced record losses of U$19.2bn.

To put that in perspective, this amount would be more than enough to run a couple of banana republics for a decade, keep Imelda Marcos in shoes for a year and still have change to see George Formby at the Rex, get a tram back home and buy cod'n'six for your tea.

So, how is the company handling this crisis? Brilliantly, natch.

Nortel issued this internal memo on Friday 15 June. It shows that the trend to hide unpleasant truths behind euphemisms is alive and well. As the old song goes: You say: 'Alignment Plan', I say: 'You're fired' - Let's call the whole thing off.... Read it and weep:

Audience: Nortel Networks Employees

This morning we issued an important announcement regarding our outlook and the steps we are taking to continue to align our business to a severe economic and industry downturn and what is a period of profound adjustment for our customers.

As we indicated in our announcement, we believe that this downturn will be protracted. We should fully recognize how difficult this period will be. The six priorities in our "Alignment Plan" reflect the seriousness of the situation that we, and our customers and other market participants, find ourselves in. We must continue to:

1. Accelerate our cost reduction and reset to "break even" at current business levels;

2. Return to positive cash flow by management of expenses, inventories, capital and receivables;

3. Focus business around core growth areas and exit/dispose of/transition our ownership in others;

4. Retain employees by implementing initiatives such as the Stock Option Exchange;

5. Target top customers and direct sales opportunities for incremental and new revenue and ensure superior customer satisfaction; and

6. Deliver on our key product initiatives targeting high-growth markets.

As I indicated today, and in our town-hall of last week, we are making good progress against this "Alignment Plan." The programs that we have implemented since the beginning of the year are expected to result in excess of US$3 billion in savings on an annualized basis. We have more work to do, but this is a good start.

We have thus far notified approximately 20,000 employees. Sadly, due to the protracted downturn, we will be eliminating another 10,000 positions as we continue to align with the market. We will move as quickly as we can with the aim of having this completed by the end of the third quarter.

Despite the times, Nortel Networks remains one of the best-positioned companies in our industry. Our leadership bench-strength and employees are among the best in the world. We have a world-class portfolio of solutions that lead the market today and we are on track to bring the next generation of solutions to market. Our sales and technical teams are lined up against the top service providers and are focused on delivering a superior customer experience. The challenge before us is clear: execute our "Alignment Plan" and emerge from the severe downturn and this period of adjustment as a strongly positioned company.

I want to thank you all, along with our shareholders and suppliers, for the support we are receiving during this very difficult period. I do not underestimate the toll it is taking on you and your families, and I want you to be assured that we are doing everything we can to get through this period of alignment as fast as we can.

By my retirement in April, my goal is to have Nortel Networks returned to profitability and positioned as the undisputed leader in our target markets and with the customers we serve. Although we will continue to face a challenging market environment for the near term, I am personally committed to building on our leadership, re-establishing our momentum, and getting our realignment completed.

Thank you,

John Roth

Hold on. One minute you're going to Retain employees by implementing initiatives such as the Stock Option Exchange, and then the next you're eliminating another 10,000 positions as we continue to align with the market.

As someone once put it: So come on and let me know - should I stay or should I go?

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