Nortel loss widens, plans to cut 2,100 jobs
By Wojtek Dabrowski
TORONTO (Reuters) - Nortel Networks Corp reported a bigger fourth-quarter loss on Wednesday because of a $1.1-billion tax charge and said it will slash 2,100 more jobs as it faces persistently slow demand for the telecoms equipment it makes.
Its shares fell more than 14 percent to a year low after it also said it expected 2008 revenue to rise by "low single digits" compared with 2007.
Since the bursting of the tech bubble at the beginning of this decade, Nortel and many of its competitors have announced thousands of layoffs and other cutbacks as they try to deal with slower sales and billions in losses.
"Growth is very slow for everybody, including Nortel, and it's not going to get any better any time soon," said Ed Snyder, principal analyst at Charter Equity Research.
In recent months, soft demand for telecom gear has been exacerbated by economic turbulence in the United States.
"It is a challenging environment," Chief Executive Mike Zafirovski told analysts during a conference call. "As a result of it, we came at the lower end of our previous revenue guidance."
At the end of 2006, the company had 32,550 employees -- the most recent figure available. In addition to the 2,100 jobs it plans to eliminate mostly in North America, Nortel said it will move another 1,000 jobs to locations such as China and India where growth is higher and costs are lower. It did not say where jobs will be cut.
"The work force reduction is going to be necessary," Snyder said. "The whole industry is suffering from too many players and not enough revenue." Continued...