The telecommunications equipment maker announced that it does not expect a meaningful recovery in the optical networking market before the end of 2003 or early 2004.
Nortel Networks plans to record charges of approximately USD600 million worldwide in relation to restructuring, the majority of which is to be recorded in the second and third quarters of 2002. This will reduce Nortel's global workforce to around 42,000. "We are still assessing the announcement in terms of our Irish operation," said David Silke, PR Manager for Nortel Networks in Ireland, speaking to ElectricNews.Net.
Nortel employs around 240 people in Galway in an R&D centre and over 100 in its sales and administration office in Dublin. It also employs 1,100 people in its Monkstown operation outside Belfast. Silke confirmed that optical networking comprised part of the Monkstown operation, but he said that the Galway operation was unlikely to be affected. "The R&D centre has won a global remit and is Nortel's only enterprise R&D centre in Europe," said Silke. "There is no reason to believe that the latest cutbacks will affect the Galway operation."
Nortel has had a series of redundancies in Ireland over the past 12 months. It integrated its Shannon office into its Galway office and reduced the workforce on the island from over 3,000 to 1,500. Since January 2001, Nortel's worldwide workforce has fallen from 94,500 and will reach an expected level of 42,000 by the end of the third quarter in 2002.
The company plans to streamline the optical networking business and focus on the capabilities that it expects to be in demand when the market recovers, including optical switching, next generation photonic transport capabilities and network management and intelligence. The plan includes the potential sale or resizing of the optical components business.
"We are aligning our optical business model to where we see the industry going to ensure we are well positioned when spending resumes," said Frank Dunn, president and chief executive officer of Nortel Networks, in a statement. "Optical backbone networks are the foundation of multimedia broadband networks and we expect Nortel Networks to remain an industry leading provider of end-to-end optical networking solutions."
Dunn added that Nortel aimed to further reduce its cost structure to bring it into a profitable position at the current market levels. He predicted that the latest announcement would reduce costs from the previous target of USD3.5 billion down to USD3.2 billion.