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Technology Stocks : Nortel Networks (NT)
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To: Paul Fine who wrote (716)9/14/1998 8:48:00 PM
From: WiseGuy  Read Replies (1) of 14638
 
> Re the 3500 job layoff announcement today, a corrected press release
> came out and said the layoffs would be in all divisions, including
> broadband. What is not clear is whether the 3500 jobs includes the
> 800-900 jobs cut at RTP, announced on Friday. With 80,000 jobs
> worldwide, this is still a small cut for NT overall(I know, it is a
> big cut to the 3500 people who lose their jobs)

NT is trying to convince the street that this layoff is part of an
attempt to streamline its operations. It so happen that this is
happening right in the middle of world turmoil, so it isn't clear that
the layoffs are associated with any slowdown or not. Why don't Cisco
or Lucent announce layoffs? Not typical for strong companies to
announce layoffs of this magnitude - 4-5% of workforce reduction is
quite significant. This is probably the worst time in the industry to
be announcing any layoff. NT will have to do even more to re-assure
the street.

The good thing I see is that NT has probably factored in the layoffs
prior to the recent re-iteration of growth for remaining of '98 and
'99. The layoffs have probably been planned for months. So, I think
here we have another case of whether the company knows it future
better or the analysts know the company's fate better.

(In Intel's case, management was right and shareholders got rewarded)
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