Hewlett Packard
Jan. 11 -- Nortel Networks Corp., the world's No. 1 supplier of fiber-optic networkequipment, said today that it will cut 4,000 jobs overthe next six months as part of a plan to freeze staffing at2000 levels and focus on its high-growth businesses.
Nortel, which had about 86,000 staff in 2000, said that thejob cuts in poorly performing parts of the company will bebalanced by hirings in such high-growth areas as fiber-opticsor wireless network technology.
The Brampton, Ontario, company said the first round oflayoffs include about 750 staff in Ottawa and another 200 inToronto, who received pink slips on Tuesday.
"Our goal and expectation is to try and keep our work forceflat," said Nortel spokesman Andy Lark.
"We let 200 people go in Toronto, but we hired 200 peoplein the last four weeks … and the same with Ottawa, we've hiredthousands of people in Ottawa."
Nortel employs 35 percent of its staff in the United States and 25percent in Canada.
Layoffs Come Before Earnings Report
The company's last round of job cuts came in 1999, when itcut nearly 8,000 jobs and sold a string of manufacturing plansunder a restructuring.
The news comes a week in advance of Nortel's fourth-quarterresults, which are expected on Jan. 18.
"It is an indication that Nortel has decided that earningsmatter and that they finally really need to do something aboutrelatively poor operating margins," said Paul Sagawa, ananalyst at Sanford Bernstein.
Nortel has posted operating margins of about 8 percent inthe last year, he said, vs. competitors' margins in the low-to mid-teen range.
Growing competition in the optical sector and Nortel'sthird-quarter slowdown in optical system sales may have fueledthe staff cost-cutting measures, he added.
Still Aiming for Fourth-Quarter Projections
Rumors that Nortel has been "pretty aggressive" in pricingother products, such as wireless and switching equipment, couldhave added a further catalyst, the analyst added.
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