Nortel suffers US$3.4 billion loss; cuts 1,300 jobs

Canadian telecommunications vendor Nortel Networks has suffered its largest quarterly loss in seven years amounting to US$3.413 billion, from a loss of US$113 million in the previous quarter and a profit of US$27 million a year ago.

CEO Mike Zafirovski is taking drastic actions to reduce Nortel’s expenditure, which includes cutting 1,300 jobs

Nortel said a press statement it will continue to slash another 1,300 global jobs. This is in addition to the 60,000 positions already dropped in the past six years and the 2,100 job cuts announced in its Q108 results.

This includes the departure on January 1, 2009 of key senior executives including chief marketing officer Lauren Flaherty, chief technology officer John Roese, global services president Dietmar Wendt and executive vice president of global sales Bill Nelson. 

Revenue for the quarter ending September 30 was US$2.319 billion, 13 per cent less than the previous quarter and 16 per cent less than the same period last year.

The company expected its drastic actions, ongoing restructuring and other cost reduction measures would reduce annual gross costs by approximately US$400 million in 2009. 

Nortel president and CEO Mike Zafirovski said the quarter’s results were in line with the company’s expectations considering the global economic slowdown taking place, and said the vendor would take further decisive action in an environment of decreased visibility and customer spending levels.

“We are acting quickly to become a simpler and leaner company, with the greater flexibility and responsiveness required to manage our business in a rapidly changing marketplace,” Zafirovski stated.

“Operating expenses in the third quarter are down significantly, partly as a result of immediate additional actions taken by the company to improve our cost-base, decreasing over US$100 million both sequentially and year over year.”