FEARS GROW OVER FURTHER NORTEL JOBS LOSSES

FEARS continue to grow on the future of jobs at troubled communications equipment supplier Nortel Networks.

The company has announced that it is to cut a third of its entire workforce, some 10,000 jobs worldwide, in the wake of a dramatic downturn in the company’s fortunes this year.

Faced with a slowdown in the US economy and mounting operational costs the company has embarked on a huge restructuring programme which would mean a loss in excess of £13 billion in the second quarter.

John Roth, president and chief executive officer, Nortel Networks, said: “Led by the United States, the global telecom industry is undergoing a significant adjustment.

“After several years of capital expansion exceeding the pace of business performance, the capital markets have significantly reduced the flow of funds to service providers. In response, service providers have made driving return on invested capital their primary focus. Consequently, new capital expenditures are being curtailed as service providers look to drive further efficiencies from the investments they have already made. As a result, we are seeing a very significant reduction in equipment purchases in the second quarter of 2001 compared to the first quarter of 2001 and the second quarter of 2000.”

Nortel has announced streamlining initiatives that include the discontinuation of the company’s access solutions operations and bid to enhance financing flexibility through US$2.0 billion of additional borrowing.

The latest rounds of jobs cuts are expected to be complete by September and are on top of the 20,000 jobs already shed this year. (SP)