Nortel Networks warns of 1st quarter loss
02/16/2001 7:34:00 AM MST Albuquerque, Nm
By Dustin D. Brand; Owner AMO
Nortel Networks will slash 10,000 jobs this year
February 15th, 2001 was a great day for the American stock markets.
Nortel Networks didn't fair so well on news of an expected 1st Quarter loss, citing spending delays of US Customers. As a result, Nortel Networks said they will cut 10,000 Jobs this year due to their lowered outlook.
The Brampton, Ontario-based company also sharply reduced the revenue and earnings growth that it's projecting for this year as a whole. Nortel previously said both revenue and earnings were expected to increase 30% on an annual basis, but it's now forecasting growth of 15% and 10%, respectively. This quarter's loss from operations is likely to be roughly 4 cents per share on revenue of $6.3 billion, the company said.
However, John Roth, Nortel's president and CEO, said in a statement today that the company is "seeing a faster and more severe economic downturn" in the U.S. than it had expected. That's resulting in "longer-than-expected delays in spending by our U.S. customers as they continue to assess the impact of the economic ... conditions on their businesses," Roth added. And the slowdown will likely continue "well into the fourth quarter," he said.
Because of the uncertainties, Nortel said it will move immediately to streamline internal operations. The planned cuts would reduce the company's workforce by 11% from 94,500 employees at the start of January. About 6,000 workers have already been let go, Nortel said, adding that it hopes to minimize the number of layoffs through attrition and retirement.