Nortel to slash another 3,200 jobs
Posted February 25, 2009 11:57 a.m. EST
Updated February 25, 2009 3:29 p.m. EST
Research Triangle Park, N.C. — Bankrupt telecom equipment company Nortel Networks Corp. plans to cut its work force by 3,200 jobs worldwide.
Nortel employs some 2,000 of its 30,000 people in Research Triangle Park.
What impact the cuts will have on the Triangle is not yet known.
"Can't comment on today's impact, as we are still working through that process," a Nortel spokesperson said. "[I] can't say how it will impact RTP."
The Canada-based telecom equipment-maker said Wednesday the new round of job cuts will be made over the next several months. The reduction is on top of 1,800 job cuts announced earlier.
Nortel filed for creditor protection Jan. 14 in Canada and the United States.
The company said the layoffs will occur over the "next several months."
"There is nothing more difficult than notifying employees, and Nortel is extremely conscious of the personal financial burden this will cause affected employees and their families," Mike Zafirovski, Nortel’s chief executive officer, said in a statement. "Nortel is a company driven by people and innovation. But with the unprecedented economic environment and resultant impacts on revenues, significant changes are required to regain our financial footing. Tough decisions are being made to restructure the company and work toward a successful emergence from creditor protection."
Nortel also said it will make changes in employee compensation plans, including no bonuses for 2008. The company also said it is seeking court approval to end equity-based compensation plans, such as stock options,
However, Nortel said it plans to continue its annual incentive plan in 2009.
"This will provide a more immediate incentive for employees upon the achievement of critical, shorter-term corporate performance objectives, including specific operational metrics in support of customer service levels as the company works through its business and financial restructuring," Nortel said in a statement. "The Company will seek to implement, and request court approval where required, retention and incentive compensation for certain key eligible employees deemed essential to the business while under court protection."
Also, Nortel is asking for court approval to hire a consulting firm to help it deal with compensation planning.
According to the Reuters news service, Nortel wants to retain compensation consulting firm Mercer, which charges rates of more than $200 per hour, with top consultants earning $667 an hour. Mercer is part of New York-based Marsh & McLennan Cos.
As part of the bankruptcy process, Nortel terminated severance benefits to recently laid-off workers. Nortel also said it is planning further restructuring.
According to a news report in Ottawa, a cut of some 120 jobs is expected on Thursday as Nortel continues to shut down efforts in a wireless technology known as WiMax.
A Nortel spokesperson told WRAL.com and Local Tech Wire that the termination of the WiMax project was not part of the bankruptcy proceeding, adding that plans had been in place for months to terminate it.
Nortel’s Karen Monaghan declined to give CTV Ottawa specific numbers about the layoffs.
"We realize that this is a very difficult time for these employees ... the reductions will be done in a respectful manner over the coming weeks and months, but until official announcements are made, I cannot give any specific information," she said.
Meanwhile, Zafirovski has declined to take a cut in his salary of more than $1 million a year.
"In order to execute a highly complex restructuring program, Nortel has sought counsel from experts with specific experience working with companies who have successfully managed their business while under creditor protection," a Nortel spokesperson told Reuters.
Last week, Nortel agreed to sell some application-delivery technology to Radware for $17.65 million. According to ComputerWorld, the technology was included in a $6 billion purchase Nortel made for a company called Alteon in 2000.
A Nortel spokesperson told ComputerWorld that not all technology and personnel involved in the Alteon purchase were part of the sale to Radware.