Nortel Networks Ltd. said its anticipated restructuring will lap up 1,400 jobs in the United States, and the overall job overhaul will generate charges of about $450 million.
The vendor had announced plans earlier this month to cut jobs just as it is undergoing a review of its finances because of possible accounting problems. It also pared down its financial estimates for the third quarter. Nortel put off the release of its next quarterly results to the end of October.
In the break down of the job cuts, its Canadian operations will lose 950 jobs, Europe, Middle East and Africa will give up 650 positions and other places will shed 250 workers.
“The decisions made to reduce our employee community and refine operational efficiencies have been undertaken in a very considered way,” said Bill Owens, president and chief executive officer at the company, adding the “plan demonstrates our commitment to ‘costs, cash and revenues’ as strategic imperatives in managing our business and driving growth.”
The telecom giant said the cuts will result in ongoing reductions in research and development expenses, selling, general and administrative expenses, and costs of sales.
About two-thirds of the affected employees will be notified by Dec. 31, 2004, and the remainder by June 30, 2005.
Nortel said it anticipates cost savings from the work plan of about $500 million in 2005 and also expects to reduce its operating expenses to 35 percent of revenues or lower next year.
The vendor believes the work plan will lead to smaller work space, which will also lead to reduced expenses.
