Telecommunication equipment maker Nortel Networks yesterday announced a projected loss for the third quarter of $US3.6 billion and said it would lay off an additional 10,000 employees.
The company also said that chief financial officer Frank Dunn would replace John Roth as president and CEO, effective from November 1. Roth, who had notified the Nortel board in April that he would step down as CEO, will remain with Nortel as vice chairman until the end of 2002, company officials said. Terry Hungle, formerly president of finance for Nortel Networks Americas, will replace Dunn as CFO. Nortel will also shift a number of senior managers as it narrows its business to focus on three main areas: optical long-haul networks, wireless networks and metropolitan networks.
Nortel, which started the year with 92,000 employees, will have a workforce of nearly half that, or 45,000 by the end of October due to continuing layoffs, officials said. The company gave the outlook in advance of its official third-quarter earnings report, which is scheduled for October 18.
Roth said in a statement: "In light of the current levels of expected industry spending, we are adjusting our work plan and targeting a cost structure, expected to be in place during the first quarter of 2002, to drive break-even at a quarterly revenue level well below $4 billion, instead of the $5 billion quarterly revenue level outlined previously."
Dunn said the company would continue divesting what it considers non-core businesses. "We have now entered into, announced or completed transactions that are expected to result in cash proceeds of approximately $700 million, the majority of which is to be received over the next two quarters," Dunn said.
Yesterday, in a separate announcement, Nortel said it would sell its Clarify customer relationship management (CRM) assets to Amdocs in Missouri, for $200 million in cash. Nortel also said it had entered into an agreement with C-MAC Industries in Montreal to divest most of Nortel's manufacturing operations related to systems integration and testing of digital multiplex switching equipment. C-MAC, according to Nortel officials, will become a supplier of those services and sell them back to Nortel.
Nortel previously reported a $16.4 billion loss for the quarter to June 30, and a $19 billion loss for the six months to June 30.