The layoffs will take place worldwide over the next several months.
“There is nothing more difficult than notifying employees, and Nortel is extremely conscious of the personal financial burden this will cause affected employees and their families,” said Mike Zafirovski, Nortel president and CEO, in a prepared statement. “Nortel is a company driven by people and innovation. But with the unprecedented economic environment and resultant impacts on revenues, significant changes are required to regain our financial footing.”
Indeed, Nortel is on precarious financial footing. The Canada-based telecom equipment maker declared bankruptcy on Jan. 14. Its stocks have held at 32 cents on the New York Stock Exchange for months and a planned sale of the very valuable Metro Ethernet Networks unit didn’t go as hoped, so it was shelved entirely. Nortel did, however, sell some of its application delivery business to Radware. That deal was announced last week, although the terms were not disclosed.
But executives still must see room to cinch the belt because, in addition to the new job cuts, they’re ending stock-based compensation. They’re also not paying any bonuses for 2008. And yet, the company will issue some grants in 2009 and offer financial incentives to retain certain employees; few details on those points were available.