Nortel Networks Corp. forecasts a quarterly net loss of around US$19.2 billion and announced it was looking to cut a further 10,000 jobs, Nortel said Friday.
The company announced a further net loss on operations of $1.5 billion based on revenue from continuing operations of $4.5 billion in the second quarter of 2001. Nortel plans to withdraw from the access products business, and has implemented cost-saving programs that it expects will save it $3.5 billion annually, it said in a statement.
The company said it is planning a further reduction of approximately 10,000 positions to be completed by the end of September 2001 and result in workforce reduction and related charges being recorded in the third quarter of 2001. Nortel had announced in April 2001 that it was looking to cut 20,000 positions and the close facilities related its workforce reduction and business streamlining.
Nortel will also cease paying dividends after an already-declared dividend of $0.01875 per common share has been paid on June 29.
The sharp downturn in Nortel’s results is due to a spending freeze by telecommunication service providers, which are trying to squeeze more out of their existing equipment investments, Nortel president and CEO John Roth said in a statement.
The forecast net loss includes an adjustment to the value of intangible assets of $12.3 billion in connection with the acquisitions of Alteon WebSystems Inc., Xros Inc., Qtera Corp. and JDS Uniphase Corp.’s 980 nanometre pump-laser chip business.
“The result of this action adjusts the asset value on our books for these stock for stock acquisitions to reflect current market valuations, or in other words, it is the equivalent of having made these acquisitions at the current stock prices,” Roth said, according to the statement.
Nortel, in Brampton, Ont., can be reached at http://www.nortelnetworks.com/.