Nortel could cut up to 5,000 jobs next week: analysts

Tue Nov 4, 2008 2:17pm EST
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By Wojtek Dabrowski

TORONTO (Reuters) - Nortel Networks Corp could shed between 3,000 and 5,000 jobs when it details its latest restructuring plan next week, analysts said on Tuesday.

The company, North America's biggest maker of telephone gear, said in September that a weak economy and spending cutbacks by the telecom companies that buy its equipment will lead to lower sales. It said these factors will necessitate new job cuts, but it did not specify a number.

Nortel's payroll stands at about 32,000 -- down from a peak of more than 90,000 in 2000 before the technology bubble burst.

It announced in February that it would cut 2,100 more jobs, but it was not clear how many of those layoffs have been implemented already.

The Toronto-based company is set to report its third-quarter results on November 10 and analysts said it will also likely issue a more detailed update on the latest restructuring.

While Nortel needs to rein in its cost base, it is also limited in the number of workers it can cut at one time, said Ed Snyder, principal analyst at Charter Equity Research.

"You run into structural issues when you cut off too many people at once," he said. "It causes a huge disruption."

Morale suffers and remaining employees could start looking for work elsewhere.   Continued...

<p>A Nortel sign is seen in downtown Toronto February 27, 2008. REUTERS/Mark Blinch</p>