Citing a worsening of economic conditions since its last financial update in September, Nortel issued its Q3 financial report and confirmed plans for further job cuts.
Revenue in the third quarter of $2.32 billion decreased 14 percent year over year and down 1 percent on a year-to-date basis. The decline compared to the year ago quarter resulted from a challenging economic environment, competitive pressures and reduced spending by key carrier customers.
Plans call for the reduction of approximately 1,300 positions, with about 25 percent of the net reduction taking place in 2008 and the remainder in 2009. This is expected to result in annual gross savings of approximately $190 million, with total charges to earnings and cash outlays of approximately $130 million. In addition to deeper cuts in spending, the company is considering possible sales of its real estate holdings.
Effective January 1, 2009, Nortel will decentralize several corporate functions and transition to a vertically integrated business unit structure. This includes:
- Enterprise customers will be served by a highly focused and dedicated business unit that will drive product and portfolio development, R&D, marketing and sales, partner and channel management, strategic business development and associated functions. Led by Joel Hackney it will include the entire communications solutions portfolio (voice, data and unified communications), advanced software and the associated value-added services and solutions.
- Two business units with full responsibility for all product, services, applications, portfolio, business and market development, marketing and R&D functions will serve Nortel's Service Provider customers: Carrier Networks (consisting of wireless and carrier value-added activities), led by Richard Lowe; and Metro Ethernet Networks, led by Philippe Morin. A dedicated global carrier sales organization will support both business units, led by Darryl Edwards.
There is no update at this time on Nortel's review of the potential divestiture of the MEN business.http://www.nortel.com
