TORONTO—Nortel Networks Corp. reconfirmed its guidance for the second quarter and said it plans to lay off another 3,500 employees related to the realignment of its optical long haul business.
Pro forma net loss from continuing operations is expected to improve and second-quarter revenues are expected to be flat to down 5 percent from the first quarter.
Lackluster market conditions, which are not expected to improve until late next year or early 2004, prompted Nortel to streamline its optical long haul business. Nortel said it will focus on optical switching, photonic transport capabilities and end-to-end network management and intelligence. The plan includes the potential sale and/or resizing of the optical components business as well.
“Our focus is to bring all of our business units into a profitable position at the current market levels. These actions help to do that and will reduce our overall break even cost structure to approximately $3.2 billion of quarterly revenues (not including costs related to acquisitions and any special charges or gains), down from the previous target of approximately $3.5 billion. We expect this cost structure to be in place by the fourth quarter of 2002,” said Frank Dunn, president and chief executive officer of Nortel.
Nortel will record a charge of approximately $600 million related to the layoffs, the majority of which should be recorded in the second and third quarter.
The company now has about 42,000 employees.
