TORONTO (Reuters) - Even as losses and layoffs mount at Nortel Networks Corp and analysts raise questions about the telecom equipment maker’s future, its chief executive continues to believe the company can win market share and succeed.
In an internal memo sent to employees on Tuesday and obtained by Reuters, Mike Zafirovski urges employees to “work to drive down costs and drive up sales” and “understand the realities of a tough marketplace, but use them to seize share and have faith that we will succeed in the end.”
Zafirovski’s remarks come about a week after Nortel posted a quarterly loss of $3.4 billion and announced yet another round of sweeping cost cuts, including 1,300 layoffs to its 30,000-strong workforce.
Following the financial report, at least one analyst said he believes things have gotten so bad at Toronto-based Nortel that the company will have to fund its operations through asset sales, and it risks running out of money before 2011.
Another analyst said last week that Nortel cannot succeed as it exists today and the setbacks it faces make it attractive only to investors who are betting it will be broken up or sold.
But Zafirovski’s memo, which a Nortel spokesman confirmed was sent to workers, suggests the company sees a very different reality.
“I believe Nortel can be a strong partner for our customers today and for the long-term,” he wrote. “Today, we have leading innovations and solutions ahead of the market and people who know how to deliver the business value our customers need.”
Nortel’s fortunes have soured as telecom companies scale back spending on the equipment it makes. At the same time, the company faces intense competition from European and North American rivals such as Alcatel-Lucent and low-cost Asian vendors like Huawei Technologies.
Nortel’s stock has plunged from more than C$1,100 in mid-2000 to close at 67 Canadian cents on the Toronto Stock Exchange on Tuesday, down 8 Canadian cents, or 11 percent.
The company has responded to the downturn in its business with round after round of cutting costs.
“We are creating a leaner, more streamlined company that can be agile and responsive to our core customers,” Zafirovski wrote in the memo. “By building a more cost-effective and productive organization, we give Nortel a chance to succeed.”
Reporting by Wojtek Dabrowski; editing by Rob Wilson