Nortel Networks Ltd. unveiled some of the mysteries regarding its financial performance since the year began, coupling the figures with a restructuring plan that will slash 3,500 jobs, or 10 percent of its staff.
The firm also fired seven executives, four of whom had previously been placed on paid leaves. The company previously fired its former president and chief executive officer, chief financial officer and controller April 28.
The job cuts, which will be completed by the end of the year, will cost the company between about $300 million and $400 million and save between $450 million and $500 million annually.
“In an increasingly cost-competitive environment, we are taking the steps necessary to continue to grow market share and, together with the actions announced today, are taking the important steps to improve our profitability and cash generation,” said Bill Owens, CEO of the company.
In an estimate of its financial performance, Nortel said its revenues for the half year amounted to about $5.1 billion, with $2.5 billion in the first quarter and $2.6 billion in the second quarter. Net earnings were break-even to 2 cents in the first half, with break-even to 1 cent in the first quarter and break-even to 1 cent in the second quarter.
The company’s wireless business accounted for 51 percent of its revenue in the first and second quarters; enterprise brought in 21 percent in the first quarter and 22 percent in the second quarter.
The company also said it will converge its wireless, optical and wireline networks under a division called carrier networks. The company will create the position of chief marketing officer. Pascal Debon, who is president of wireless networks, will assume the post of president of carrier networks. Sue Spradley will assume the post of president, global operations, reporting to the president of carrier networks.
Brian McFadden, who is president of optical networks, will be chief technology officer and replaces Greg Mumford, who will retire next year. Mumford will be special advisor to the CEO in the interim.
Mired in financial crises during the past year, Nortel has been the target of investigations by the Securities and Exchange Commission, the Royal Canadian Mounted Police and the Dallas branch of the U.S. Attorney.
