Nortel to Layoff 1,300 People, Posts Big Loss
Nortel Networks reported a large quarterly loss and announced a round of sweeping cost-cutting Monday, from laying off 1,300 people to freezing salary increases and cutting back on consultants, as the economic downturn eats away at its business and strains its balance sheet.
Nortel, North America's biggest maker of telephone gear, said the rapid deterioration of the economy had pushed it once again to cut its 2008 outlook as telecom companies reduce spending on the equipment it makes.
The company posted a third-quarter loss of $3.4 billion, or $6.85 per share, compared with a year-earlier profit of $27 million, or 5 cents a share.
The loss included a tax adjustment of $2.07 billion as well as a $1.14 billion goodwill write-down, Nortel said.
In September, the Toronto-based company said its 2008 revenue would fall between 2 percent and 4 percent.
Now, just two months later, Nortel said the decline will hit the high end of that range.
"In light of the economic and market conditions ... Nortel continues to experience significant pressure on its business and the deterioration of its cash and liquidity," the company said.
Revenue in the quarter fell to $2.3 billion from $2.7 billion, in line with analyst expectations, according to Reuters Estimates.