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Nortel workers brace for layoffs
Bert Hill
The Ottawa Citizen
Thursday, October 16, 2003
ADVERTISEMENT
Some Nortel Networks employees are bracing for a new round of layoffs.
The cuts could be announced next week when Nortel releases quarterly results and would take effect in November.
The most likely target is the optical network division, according to people familiar with the situation. It accounted for $298 million U.S. or 13 per cent of sales in the quarter that ended in June.
A Nortel Networks spokeswoman declined comment yesterday, saying the company "cannot comment on rumour or speculation."
Optical Networks was the weakest performer, generating $24 million in operating profits in the quarter, the worst among Nortel's four major divisions. The weak performance helped drive Nortel back into the red last quarter after one profitable quarter, though the enterprise division was a much bigger culprit as profit margins fell by one-third, or about $50 million.
Nortel generated a profit in the first quarter with big help from the sale of assets. Operating profits in the optical division almost doubled between the March and June quarters.
Chief executive Frank Dunn is determined to return the company to profitability, even though overall sales continue to languish at eight-year lows.
Brian McFadden, the executive responsible for Optical Networks, is believed to be working with his managers to make job cuts and take other action because optical sales are not expected to pull out of a deep slump in the foreseeable future.
The division generated more than $3 billion in operating profits on sales of $11 billion in 2000 at the peak of the optical boom. Sales this year will likely be about $1.1 billion, and it could turn an operating profit of $50 to $100 million.
The long-haul optical division -- which generated about 25 per cent of optical network sales -- will likely experience the most pain, according to people familiar with the operation. But the healthier Sonet/SDH and metropolitan divisions will also likely be affected.
Most Nortel optical operations are in Ottawa and Britain.
The extent of cuts in the division has not been revealed. Some employees declared surplus could find jobs in other divisions, which are adding some staff.
Deutsche Securities analyst George Notter is forecasting sales of $283 million in the optical division in the September quarter and sales of $303 million in the December quarter.
But the likelihood layoffs suggests the fortunes of the optical division won't pick up without a new round of surgery.
Nortel completed numerous painful rounds of job cuts late last year. They reduced Nortel employment by more than 60,000 jobs to the current level of 36,000.
© Copyright 2003 The Ottawa Citizen
Bert Hill
The Ottawa Citizen
Thursday, October 16, 2003
ADVERTISEMENT
Some Nortel Networks employees are bracing for a new round of layoffs.
The cuts could be announced next week when Nortel releases quarterly results and would take effect in November.
The most likely target is the optical network division, according to people familiar with the situation. It accounted for $298 million U.S. or 13 per cent of sales in the quarter that ended in June.
A Nortel Networks spokeswoman declined comment yesterday, saying the company "cannot comment on rumour or speculation."
Optical Networks was the weakest performer, generating $24 million in operating profits in the quarter, the worst among Nortel's four major divisions. The weak performance helped drive Nortel back into the red last quarter after one profitable quarter, though the enterprise division was a much bigger culprit as profit margins fell by one-third, or about $50 million.
Nortel generated a profit in the first quarter with big help from the sale of assets. Operating profits in the optical division almost doubled between the March and June quarters.
Chief executive Frank Dunn is determined to return the company to profitability, even though overall sales continue to languish at eight-year lows.
Brian McFadden, the executive responsible for Optical Networks, is believed to be working with his managers to make job cuts and take other action because optical sales are not expected to pull out of a deep slump in the foreseeable future.
The division generated more than $3 billion in operating profits on sales of $11 billion in 2000 at the peak of the optical boom. Sales this year will likely be about $1.1 billion, and it could turn an operating profit of $50 to $100 million.
The long-haul optical division -- which generated about 25 per cent of optical network sales -- will likely experience the most pain, according to people familiar with the operation. But the healthier Sonet/SDH and metropolitan divisions will also likely be affected.
Most Nortel optical operations are in Ottawa and Britain.
The extent of cuts in the division has not been revealed. Some employees declared surplus could find jobs in other divisions, which are adding some staff.
Deutsche Securities analyst George Notter is forecasting sales of $283 million in the optical division in the September quarter and sales of $303 million in the December quarter.
But the likelihood layoffs suggests the fortunes of the optical division won't pick up without a new round of surgery.
Nortel completed numerous painful rounds of job cuts late last year. They reduced Nortel employment by more than 60,000 jobs to the current level of 36,000.
© Copyright 2003 The Ottawa Citizen
