Nortel to cut 3,200 workers
Nortel Networks plans to lay off 3,200 workers worldwide, about a tenth of the total workforce. The latest round of reductions follow 1,800 job cuts the company announced in December.
The Toronto-based telecom equipment maker, which filed for bankruptcy protection last month, said today it will also drop employee bonuses for 2008 and end stock-based compensation. Nortel expects the layoffs to be made over the next several months.
"Tough decisions are being made to restructure the company and work towards a successful emergence from creditor protection, Nortel CEO Mike Zafirovski said in a statement.
A Nortel spokesman confirmed to us that none of the employees being laid off in North America will receive severance pay.
"Unfortunately, as we announced with our bankrupcy filing in January, we will not be able to pay severance," he said. "Despite every effort, we do not have the financial flexibility to make any changes to our severance policies under court protection. This makes today's decision to make layoffs even more difficult for everyone at Nortel."
Nortel filed for Chapter 11 protection last month after losing more than $4bn in 2008 due to telcos cutting back spending or switching to cheaper suppliers. The company also watched its shares plummet from $15 at the start of 2008 to just $0.10 at the close of NASDAQ yesterday.
The company also hasn't ruled out making more job cuts in the near future.
Nortel recently got an extension of its bankruptcy protection until May 1 to help develop a better turnaround plan. In addition to the new round of layoffs, Nortel will not pay bonuses for 2008 authorized by the company's annual incentive plan. The company said it will issue some grants in 2009, only based on quarterly rather than annual award payouts.
Zafirovski called the layoffs "difficult," but said that significant changes are needed to regain Nortel's financial footing. ®