Nortel Networks Ltd. announced it will cut 2,900 jobs and shift an additional 1,000 positions to “lower-cost” locations, moves designed to boost the network-equipment maker’s profits.
“These are tough but necessary measures, and we recognize the impact they will have on affected employees,” Nortel CEO Mike Zafirovski said.
Nortel said the 9-percent cut in its workforce, along with other steps, would generate an annual savings of $400 million. This comes as the Toronto-based company struggles to boost growth and profits in the face of major accounting errors in 2001, 2003 and 2005, problems that forced Nortel to restate financial reports for those periods. A $2.4 billion payout in cash and stock was recently finalized to settle stockholder lawsuits stemming from the accounting errors.
The job cuts appear to be pleasing financial analysts as the company’s stock climbed more than 4 percent on the news. The company’s stock took a slight dive yesterday after news that Nortel’s CFO was leaving the company.
Nortel also said revenue from the most recent quarter is expected to reach $3.3 billion, an 8-percent increase from the same period last year.
Nortel to cut 9 percent of workforce
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