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November 4, 2008
Fueling what's proven to be a disheartening trend among some technology-related companies this week, analysts reportedly are saying that an industry stalwart, a Toronto-based telecom equipment maker, could cut up to 5,000 jobs.
Nortel Networks Corp. could shed between 3,000 and 5,000 jobs when it released details of a restructuring plan next week, according to analysts interviewed by Reuters.
Officials at Nortel declined to comment when reached by TMCnet, saying the company does not address rumor or speculation. The company is scheduled to hold a conference call with investors at 8:30 a.m. Eastern on Monday, Nov. 10., to post third-quarter financial results.
According to Reuters reporter Wojtek Dabrowski, analysts say the call will include more details on a restructuring plan that Nortel hinted at two months ago.
“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,” Dabrowski reports. “It said these factors will necessitate new job cuts, but it did not specify a number.”
Nortel likely will rein in its cost base, but probably won’t let go of more than 10 percent of its estimated 32,000 workers in an initial cut, Ed Snyder, a principal analyst at Charter Equity Research, reportedly told Reuters.
“You run into structural issues when you cut off too many people at once,” Snyder reportedly said. “It causes a huge disruption.”
The speculation about Nortel comes as other technology-related companies report on workforce cuts.
As TMCnet reported today, the world’s leading mobile device maker today announced that it would cut nearly 600 employees, about three-quarters of those coming from its sales and marketing units. Officials at Finland-based Nokia say they’re also downsizing a company research center, relocating some offices and cutting back on their global process operations group.
Also, as TMCnet reported, a market giant that operates 712 superstores in the United States and 770 stores in Canada has announced that it’s closing 155 U.S. stores. Officials from Circuit City Stores, Inc. say they plan to reduce new store openings and renegotiate certain leases to reduce costs in this slower economy. It isn’t clear how many employees will be affected. Circuit City said it would cut its U.S. workforce by 17 percent with the store closings. The company had nearly 46,000 employees at the end of February, according to its Web site.
That figure would put Circuit City’s layoffs at a higher number than what some are speculating for Nortel.
According to one analyst interviewed by Reuters – Duncan Stewart, president of Duncan Stewart Asset Management in Toronto – Nortel likely will cut between 10 and 15 percent of staff, roughly 3,000 to 5,000 people. That figure doesn’t include employees lost through a potential sale of Nortel’s Metro Ethernet Networks, a business the company said in September that it was thinking of selling.
Stewart reportedly said that Nortel is “still way out in the wilderness.”
“It’s almost impossible to cut your way to growth,” Stewart reportedly told Reuters.
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