Nortel Trims 3Q Revenue Forecast, Cuts More Jobs

Nortel Networks

The company blamed the shortfall primarily on spending reductions among U.S. service providers.

"We continue to see reductions in near-term spending plans by service providers, especially in the United States," said Frank Dunn, president and CEO of Nortel, based here, in a statement issued after the market closed.

The company's planned restructuring activities include workforce reductions and related facilities closures and "streamlining activities," scheduled for completion by the end of the fourth quarter, according to the statement.

Nortel said its workforce will drop to about 35,000 employees, down from 42,000 after cutting 3,500 jobs in May. The company started 2001 with about 92,000 employees.

Dunn said the company still expects to return to profitability by the end of June of next year.

"Our focus will be on simplifying the structure around our three businesses and ensuring that a more direct connection exists between our operations and customer facing teams," he said. "This approach will allow us to be even more responsive to our customers' needs while reducing our cost structure."

Dunn said revenue for the third quarter, ending Sept. 30, will likely be lower than second-quarter revenue by up to about 10 percent. Previously, the company expected third-quarter revenue to be roughly flat with the previous quarter.

Last month, Nortel reported second-quarter revenue of $2.77 billion and an earnings loss of $697 million, or 20 cents per share.

Shares of Nortel Wednesday morning were down 21 cents, trading at $1.02.