Nortel to miss targets, slash more jobs
marketwatch.com
TORONTO (CBS.MW) -- Nortel Networks will miss its third-quarter revenue target and it will cut another 16 percent of its staff as U.S.-based service providers continue to reduce spending, the networking company announced on late Tuesday.
Nortel will eliminate 7,000 jobs as it seeks to lower its break-even point to below $2.6 billion in quarterly costs from a previously targeted $3.2 billion. The move will leave Nortel with 35,000 employees. Also, the company intends to close certain facilities and "streamline activities."
Nortel said it is still attempting to return to profitability by the end of June 2003. "Our focus will be on simplifying the structure around our three businesses and ensuring that a more direct connection exists between our operations and customers facing teams," said CEO Frank Dunn, according to a statement.
Shares (NT: news, chart, profile) ended the regular session down 4.7 percent at $1.23 and were not active after the late announcement. So far this year, shares are down 84 percent.
As for the third quarter, Nortel said its sales will decline as much as 10 percent from the second quarter's level of $2.77 billion. Nortel had expected flat sales and a narrower operating loss. No update was provided for the company's bottom line.
Prior to today, analysts surveyed by Thomson Financial/First Call had expected a loss excluding charges of 6 cents a share on revenue of $2.75 billion, on average.
"The market environment continues to be challenging with lower spending levels than previously expected and a more prolonged industry transition," Dunn said.
The job cuts and facility closures should be completed by the fourth quarter. |
