Nortel Axes 3,200 More Jobs

According to the Toronto-based company, the 3,200 positions will be cut over the next several months and are in addition to the 1,800 remaining layoffs it previously announced.

"There is nothing more difficult than notifying employees, and Nortel is extremely conscious of the personal financial burden this will cause affected employees and their families," Nortel President and CEO Mike Zafirovski said in a statement announcing the layoffs. "Nortel is a company driven by people and innovation. But with the unprecedented economic environment and resultant impacts on revenues, significant changes are required to regain our financial footing. Tough decisions are being made to restructure the company and work toward a successful emergence from creditor protection."

The latest round of cuts falls in line with Nortel's business and financial restructuring plan, an initiative the company implemented in hopes of emerging from creditor protection more focused and competitive.

Nortel filed for Chapter 11 bankruptcy protection in January after a series of public missteps and amid floundering revenue. In November, Nortel posted $3.4 billion in losses for the third calendar quarter, its largest loss in seven years, and said it planned to slash 1,300 jobs, impose a salary freeze and continue its already-in-place hiring freeze.

And just last week, Nortel said it was planning to sell off its Layer 4 through Layer 7 application delivery portfolio to Tel Aviv, Israel-based application delivery and security vendor Radware as part of its restructuring process.

Nortel's current state is in sharp contrast to the ambitious turnaround plan it launched in 2005 when Zafirovski joined. That plan struggled under slumping revenue, and over the last four years Nortel has chopped roughly 18 percent of its workforce and went about $4.5 billion into debt.

Nortel's decline and the layoffs that followed have put Nortel's current workforce at around 30,000, a far cry from the more than 93,000 people employed in 2001.

"We remain deeply committed to our customers and are staffed to meet their needs as we take the necessary actions to strengthen the company," Zafirovski said in the statement. "Throughout the process, we are committed to maintaining current high service levels and appropriate innovation investment levels to ensure best-in-class technology continues to be available to Nortel's global customer base."

Along with slashing more jobs, Nortel's board of directors also has approved changes to the company's compensation programs. Nortel said the board approved recommendations to not pay bonuses under the Nortel Annual Incentive Plan (AIP) for 2008. Additionally, Nortel is asking Canadian courts to approve the termination of its equity-based compensation plans, including stock options, restricted stock units and performance stock units, whether vested or unvested. Nortel also is asking no further equity be awarded in 2009.

Nortel added that it will continue its AIP in 2009 for all eligible employees, but it is being modified to award such bonuses on a quarterly basis instead of annually to employees who hit "critical shorter-term objectives."