Nortel Networks sheds 1,300 staff

Rising tide of red ink prompts further job cuts at manufacturer

Mike Zafirovski: This is a critical time for Nortel

Nortel Networks is under further pressure to scale back on spending as it announced a cull of 1,300 staff worldwide less than two months after unveiling its restructuring plans.

Drastic measures to save cash at the telecoms equipment maker include a salary freeze, a "consolidation" of management positions and the suspension of dividends on two classes of preferred shares.

"This is a critical time for Nortel," said chief executive Mike Zafirovski. "These aggressive, necessary and swift actions are focused on allowing Nortel to manage through this tough environment, while at the same time position ourselves to move forward."

Sales at the group plunged 14 per cent to $2.32bn (£1.5bn) in the period ending in September, and $3.41bn (£2.2bn) was lost on accounting charges and poor results due to the downturn.

Back in 2000, Nortel had around 100,000 employees and was briefly the leading global supplier to the telecommunications industry.

After spending levels in the sector started to decline a couple of years later, the company had to terminate operations across a number of product lines, and shed around 60,000 jobs as a result. The company's headcount now stands at approximately 30,000 globally.

Nortel is still willing to sell its Ethernet networks division to raise more capital, and it is understood that the company is in talks with a pool of potential buyers.