Bankrupt Nortel to lay off another 3,200 employees
25 Feb 2009
Canada-based telecom equipment maker Nortel Networks plans to cut its workforce by 3,200 worldwide. Nortel said the new round of job cuts would be made over the next several months. The reduction is on top of the 1,800 jobs cut already.
The cuts represent roughly 10 per cent of Nortel's workforce of more than 30,000. At the peak of the tech boom in 2000, the company employed more than 90,000 people. None of the laid off employees will get severance payouts, which Nortel suspended when it filed for bankruptcy protection last month, a company spokesman said.
Earlier this month, Nortel received a bankruptcy protection extension until 1 May from 14 January in Canada and the US and got an initial 30-day protection period. It had about $2.4 billion in cash when it sought court protection from its creditors and about $4.5 billion in long-term debt, according to court documents. (See: Nortel files for bankruptcy protection in Canada, US and Europe / Nortel shares plunge to 25-year low on gloomy forecast; looking to sell off major unit )
''Tough decisions are being made to restructure the company and work towards a successful emergence from creditor protection," CEO Mike Zafirovski said in a statement. Nortel also said it will not pay any bonuses for 2008 authorized by the company's annual incentive plan, although it will issue some grants in 2009. In addition, the vendor plans to end equity-based compensation such as stock options. To retain key employees, however, Nortel will offer financial incentives in certain cases.
The company's equity is almost worthless, with the shares trading unchanged at 10.5 Canadian cents on the Toronto Stock Exchange. In mid-2000, at the height of the company's success, the stock was worth more than C$1,100, adjusted for a share consolidation that took place in late 2006.
