Northern Telecom Ltd. last week said it plans to lay off 3,500 employees, or about 4 percent of its work force.
Shares of Nortel on the New York Stock Exchange fell $2.50 to close Sept. 15 at $43.75 following confirmation by the company of the restructuring. Nortel shares closed up at $45.56 Sept. 16.
Published reports indicate the realignment may be part of a move by Nortel to bolster its Internet products focus, which it began earlier this year with the announcement it would buy Bay Networks for $9.1 billion. The company late last month closed its acquisition of Bay Networks, which offers Ethernet and Asynchronous Transfer Mode local area network switches, routers, shared media, remote and Internet access solutions, Internet protocol services and network management applications.
Every Nortel business unit will be affected by the restructuring, with the exception of the Bay Networks line of business, said the company.
Earlier this month, following the close of the Bay Networks acquisition, John Roth, vice chairman and chief executive officer of Nortel, said, “With the merger and the associated organizational changes we’re announcing today, we’ve significantly stepped up and strengthened our attack plan, which is focused on delivering customer value in the converging telephony and Internet marketplace. The new Nortel is aggressively moving forward with a powerful and expanded arsenal of network solutions for our service-provider and enterprise customers.”
The company said many of its business units have elected to realign resources to take advantage of future growth opportunities in broadband, wireless, enterprise, carrier packet and carrier circuit networks. The realignment includes streamlining management layers, seeking additional operational efficiencies and realigning resources and investments, said the company.
Nortel said the announcement doesn’t mean any changes will be made to its lines of business or product portfolios.
Nortel told employees that the realignment would take place during the next several weeks.
Shares of Lucent Technologies Inc., also fell Sept. 15, amid increasing concerns about the outlook for 1999 earnings in the telecommunications equipment sector, reported Reuters.
