Print 9 comment(s) - last by JoKeRr.. on Mar 1 at 6:42 PM

Analysts say Nortel needs roughly half its current employees to continue to operate

It took a while for massive layoffs to hit many technology companies in the face of the weak global economy. Once the financial turmoil hit the technology sector and Silicon Valley, it hit with great force and many firms ceased to operate.

One of the biggest firms to find itself in rough financial waters was Nortel. Nortel announced in January that it was filing for Chapter 11 bankruptcy protection. The firm also filed for protection in Canada as well.

Bankruptcy was the first step for the telecom giant to attempt to save it from going out of business completely and now the company has announced more steps to protect itself. Nortel says that it will cut 3,200 jobs, 10% of its current workforce. Losing your job is bad enough, but eWeek reports that the firm didn’t offer the employees severance packages.

Nortel's workforce today is at about 30,000 and at the companies highest point it had 90,000 global employees. Severance packages were suspended when the firm filed bankruptcy in January.

Nortel CEO Mike Zafirovski said, "We do not have the flexibility, particularly in North America—Canada and the U.S.—for us to be paying severance pay." Zafirovski did say that Nortel would honor any country-specific legal obligations it has to its staff.

Nortel warned a week ago that it was working on a plan that would include more layoffs. According to an analyst from DSAM Consulting Duncan Stewart Nortel only needs about 15,000 to 18,000 employees to continue operating in its current form. That means that Nortel will likely shed up to half of its current workforce before the cuts are through.

The cuts announced this week would be in addition to another 1,800 workers still to be shed reports eWeek. Nortel is also changing its compensation structure to reduce bonuses and cut equity-based payment plans.

Court documents showed that Nortel had about $2.4 billion in cash when it filed bankruptcy with about $4.5 billion in long-term debt.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Am I the only one...
By bodar on 2/26/2009 7:54:58 PM , Rating: 5
...who read the RSS headline as
Nortel shreds 3,200 employees
and thought, "Damn, that sounds a bit extreme. Guess it's cheaper than severance pay though?"

RE: Am I the only one...
By MadMan007 on 3/1/2009 2:17:00 AM , Rating: 2
It was severence...of their heads. :o

By General Disturbance on 2/26/2009 12:58:06 PM , Rating: 2
At 10c a share, I figured I wouldn't notice missing $300 since I spend that on who knows what else that I shouldn't. So, now I have 3000 shares. If (BIG if) they get their act together, I might make a nice little return.

Here's hoping...I have a long outlook so not expecting to make the return within the next 3 or 5 years, or 10. They just need to keep from closing down shop completely.

RE: Hoping
By Gzus666 on 2/26/2009 3:36:39 PM , Rating: 2
They really only need a few changes to get back to where they were. If they clean up their tech support and get their software for their products back to its former glory, they could probably come back pretty quickly.

My pop has tons of shares in them since he has worked for them for so long, so hopefully they come back, ha.

RE: Hoping
By cutmeister on 2/28/2009 12:32:02 PM , Rating: 2
I hope you guys remember that one of the most typical outcomes in a Chapter 11 bankruptcy scenario is all the existing stock gets cancelled and shares are reissued to the company's creditors. Not much you can do about it if you worked for the company and got compensation in the form of company stock if you weren't able to sell it before the Chapter 11 filing. And yeah, if you are willing to risk $300 that the company's stock won't get cancelled then that's not a whole lot to lose.

I bet I could find some severance money
By chmilz on 2/26/2009 1:42:01 PM , Rating: 1
I'm sure there's cash to pay some severance in the bonuses of the executive team. It seems to me that these days, "restructuring" is little more than bringing in a CEO to fire 50% of a company's employees, and then paying him a multimillion dollar bonus because he found cost savings.

By JoKeRr on 3/1/2009 6:42:13 PM , Rating: 2
As a current Nortel employee, I agree with you! The current CEO at Nortel has been doing layoffs for 3 yrs, and since 2000, there has been over 16 rounds of layoffs at Nortel. The employees know that this CEO doesn't understand the industry, and is not willing to listen from people who do! Strategically this CEO's turn around plan made 3 yrs ago included 3 specific R&D focuses: WiMAX, IPTV and IMS. We wasted hundreds of millions on WiMAX BaseStation (Radio) development, canceled it to use Alvarion BTS, and now that partnership is gone too. We're definitely not a leader in IPTV or IMS. The CEO and his L6S black belts needs to go today, and Nortel needs to find a replacement from within, someone who understands the telecomm landscape, has the vision,and strives to make Nortel a feared competitor & leader in the communication world. It's not the lack of talent in the R&D teams, we need smart leaders.

Come on Nortel
By Gzus666 on 2/26/2009 12:24:36 PM , Rating: 2
My pop was telling me about them cutting severance, that always sucks, but they surely don't seem to have the cash. They need to fix their crap, cause they have some serious issues with new products and their wonderful overseas low level technical support.

Executive Comp
By CalWorthing on 2/27/2009 9:58:44 AM , Rating: 2
NT CEO Zafirovski received $10,063,078.00 in total compensation in 2007. Not including mink office slippers.

"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken
Related Articles
Nortel Files for Chapter 11 Protection
January 15, 2009, 10:57 AM

Latest Headlines
The Samsung Galaxy S7
September 14, 2016, 6:00 AM
Apple Watch 2 – Coming September 7th
September 3, 2016, 6:30 AM
Apple says “See you on the 7th.”
September 1, 2016, 6:30 AM

Most Popular Articles5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
Automaker Porsche may expand range of Panamera Coupe design.
September 18, 2016, 11:00 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM
No More Turtlenecks - Try Snakables
September 19, 2016, 7:44 AM
ADHD Diagnosis and Treatment in Children: Problem or Paranoia?
September 19, 2016, 5:30 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki