Nortel employees can't fly First Class anymore. Boy there is room for the knife to cut fat in this cat!!
Nortel memo orders staff to watch the pennies
By Reuters staff
13 March 2001
Nortel Networks employees who survive the latest round of job cuts are being asked to forgo magazine subscriptions, first class travel and cellphones in an attempt to funnel pennies to the bottom line as a deteriorating U.S. economy squeezes the company's growth plans.
The world's No. 1 telecommunications equipment manufacturer ordered employees in an internal memo dated March 8, and obtained by Reuters, to eliminate costs in the face of gloomy growth prospects.
"During this time of restraint and market downturn, we need a mind-set of total accountability for every dollar we spend," wrote Nortel's chief operating officer Clarence Chandran.
Topping the belt-tightening list are travel and living expenses, which amount to $200 million a quarter, or 4 cents a share, and $800 million, or 16 cents a share, each year, he wrote.
"By reducing travel by 50 percent we could add 10 percent to our forecast earnings," explained Chandran.
Citing a more severe U.S. economic downturn than expected, Nortel slashed its 2001 revenue growth forecast last month to 15 percent from 30 percent. It also chopped its earnings growth forecast to 10 percent from 30 percent. The company said it would cut 10,000 jobs or about 10 percent of its global workforce
Revised Nortel guidance pegs 2001 revenues at $34.8 billion with earnings of about 81 cents a share, and first quarter sales of $6.3 billion with a loss of 4 cents a share.
Analysts have expressed doubt that Nortel, which they say has been frivolous with spending in the past, would be able to meet the revised forecasts without significant cost cutting.
This skepticism shows in average analyst forecasts as polled by First Call/Thomson Financial of 66 cents a share in 2001 on $35 billion in sales.
Adding to the company's woes are failed telecom companies selling their equipment for a fraction of the cost, as well as Nortel losing out on potentially lucrative new deals.
On Monday, British Telecommunications Plc said it had dropped plans to split an $880.9 million contract for upgrading its network between Nortel and Marconi Plc in favor of using Marconi alone.
Nortel has led a parade of fiber-optic and networking companies in the past few weeks that have slashed their forecasts and costs, including JDS Uniphase Corp , Cisco Systems and Corning Inc. .
Goodbye glory days
Travel expenses will be closely monitored and Nortel's authorized travel agencies will report on any instances where an employee fails to ferret out the lowest air fares.
"Our travel service providers will issue tracking reports that measure adherence to this policy and highlight instances where lowest fares were not taken," wrote Chandran.
Employees that work from home are being told to relinquish their dedicated office space in Nortel facilities and, unless otherwise authorized, told to use personal rather than company paid Internet connections.
Pagers, cellular phones, and two-way wireless pagers made by Research In Motion - that have become popular devices in the halls of Nortel's Brampton, Ontario, head office - are now restricted to only those employees spending 25 percent or more of their time outside the office.
"I'm going to miss my RIM so much. When it hums I go ooh," said one Nortel employee, noting that the loss of perks mixed with a depressed stock price are adding up to bad morale.
And now that the business press is full of negative Nortel commentary, staff are being told to cancel all newspaper subscriptions and business magazines including Forbes and Business Week.
Also, company giveaways like golf shirts or golf balls "will be restricted to customers only".
Nortel shares dropped below their 52-week low in midday trading on Monday to $16.54, down $1.36, in New York. In Toronto the stock was off C$1.95 at C$25.70 in a generally weak market for technology stocks.
($1=$1.55 Canadian). |
