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Telecoms equipment maker Nortel Networks will cut another 7,000 jobs globally as the business warned that third quarter revenues would not meet expectations.
The company's revenue will be as much as 10 percent lower than previous announced guidance, the beleaguered Canadian firm said on Tuesday. In July, the company said its Q3 earnings would be flat, despite the USD2.77 billion it made in the second quarter. But like its competitors, Nortel continues to face a difficult market, forcing it to lower investor expectations.
With the new job cuts, set for completion by the end of the fourth quarter, Nortel's global headcount will drop to 35,000. And these cuts, according to Nortel, are designed to bring the business back to breakeven, which now stands at quarterly revenue of around USD2.6 billion, compared to its earlier target of USD3.2 billion.
There is no word on what impact the cuts will have on the company's 370 workers in the Republic of Ireland or the company's 900 workers in Belfast. "Its simply too early say," a spokesperson for Nortel Ireland said.
In July the company cut around 40 employees, or nearly 9 percent of its Galway workforce, as part of a previous job-cutting round. In fact Nortel's 60,000 global job cuts since January 2001 have had a devastating effect in its Irish operations with over 1,000 jobs lost in Belfast over the past two years. The company's operations in the Republic have not fared much better, having experienced 150 layoffs in October 2001 followed by the May 2002 cuts.
"We continue to see reductions in near term spending plans by service providers especially in the United States," said Frank Dunn, president and chief executive officer of Nortel Networks. "Despite the reduction in capital spending and revenues, we continue to expect ongoing sequential pro forma bottom line improvement in the third quarter and fourth quarter of 2002, reflecting the impact of our ongoing restructuring activities."
"Our top priority remains to return to profitability by the end of June 2003," he added. But Dunn warned, "The market environment continues to be challenging with lower spending levels than previously expected and a more prolonged industry transition."
In its last set of results, the Canadian company matched forecasts with a pro forma loss of USD0.09 a share in the quarter with sales of USD2.77 billion, just slightly below consensus targets of USD2.8 billion.
Second-quarter net loss was USD697 million, or USD0.20 a share, much better than last year's loss of USD19.4 billion, or USD6.08 per share, which was mostly due to a USD14 billion write-down for acquisitions.
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