"Thousands more job cuts at Nortel
By Leo Valiquette, InBusiness Media Network

After two preannouncements against its Q1, Nortel Networks Corp. posted results with few surprises on Thursday, but said it will cut up to another 4,000 jobs.
In a statement, CEO Frank Dunn said Nortel's workforce totaled 47,000 at the end of Q1. That's short of the 48,000 the company said in January it would end up with after it completed its job cuts in March.

As recently as Thursday Nortel spokeswoman Tina Warren told the Ottawa Business Journal the company would still have about 48,000 by the end of Q1.

In addition, Dunn said another 3,000 jobs will now be cut as it continues to divest non-core businesses and pull out of European joint ventures.

That will leave the optical networking giant with only 44,000 staff, less than half the 92,000 it was said to have employed at the peak of the tech boom in mid-2000.

The additional cuts are far short of the 10,000 jobs many analysts in recent weeks have said the company must cut to break even.

Nortel said the staff cuts to date have resulted in $6 billion in annualized savings. A charge of $150 million will be taken in the second quarter for the remainder of the job cuts.

Nortel posted a loss for the March quarter of $841 million, or 26 cents a share, compared with loss of $2.6 billion or 82 cents a share in the year ago period (all figures in U.S. dollars).

Pro forma net losses from continuing operations were $463 million, or 14 cents a share, compared with $277 million, or nine cents, in the same period of last year.

The pro forma figure excludes $378 million in after-tax charges mainly related to job cuts.

Sales fell 49 per cent to $2.9 billion from $5.75 billion. That's a 16 per cent decrease from the fourth quarter and in line with the company's most recent guidance. In January Nortel called for Q1 revenues to be only 10 per cent lower than in Q4.

The declines were felt across all three of Nortel's key business areas. Wireless networks revenues dropped 26 per cent. Metro and enterprise networks revenues declined 47 per cent. Optical long-haul networks revenues plunged 77 per cent.

In a statement Dunn said the company expects "customers to continue to limit capital expenditures and, therefore, it is difficult to predict how spending patterns will unfold in 2002."

Looking forward, Dunn said during the conference "it is too early to tell" what revenues Nortel will achieve in the current quarter, but added it is not likely to be all that different from the first quarter's $2.9 billion. For the year he expects "sequential improvement in operating performance."

The ultimate goal is to break-even on revenues of $3.5 billion by the fourth quarter.

Dunn said the area in which Nortel will differentiate itself from its competitors and gain the edge in its core businesses is research and development. Nortel spent $595 million in R&D in Q1. It will also focus on building its wireless business. "

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