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Nortel cuts jobs following woeful Q3 results

Simon Quicke

Nortel has announced job cuts and cost saving measures following the announcement of a third quarter loss of $3.4bn.

This time last year the telco specialist was reporting profits of $27m but as a result of a tax readjustment of $2.07bn and a $1.14bn write-down of goodwill those profits nose-dived into the red.

As a result Nortel announced that it would cut 1,300 jobs and look to make savings, including freezing salaries and recruitment, to help hit the target of reducing the budget by $400m next year.

Last month Nortel warned that it would suffer from revenue drops of up to 4% for the year and it reaffirmed that it would be in that range partly as a result of currency fluctuations caused by a strong dollar.

In a statement, Nortel president and CEO Mike Zafirovski, said that it had kept investors informed of the changing fortunes in the market.

"In September, we signalled our view that a slowdown in the market was taking place. In the weeks since, we have seen worsening economic conditions, together with extreme volatility in the financial, foreign exchange and credit markets globally, further impacting the industry, Nortel and its customers," he said.

"We are therefore taking further decisive actions in an environment of decreased visibility and customer spending levels," he added.

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