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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.



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Hoping
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.


“So far we have not seen a single Android device that does not infringe on our patents." -- Microsoft General Counsel Brad Smith

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