Nortel intends to reduce its workforce by an additional net 3 200 positions worldwide over the next few months. The latest cuts are in addition to 1 800 job losses already 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," saya Mike Zafirovski, Nortel president and CEO. "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 towards a successful emergence from creditor protection."
Nortel is in the process of preparing a comprehensive business and financial restructuring plan with the goal of emerging from the creditor protection process as a more focused and competitive company.
It is working with several parties, including its creditors, to define the best plan forward to present to the courts.
"We remain deeply committed to our customers and are staffed to meet their needs as we take the necessary actions to strengthen the company," says Zafirovski. "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."
The board of directors has approved changes to Nortel compensation programmes consistent with best practices for companies working through restructuring in order to maximise stakeholder value and emerge more focused and competitive.
It has approved management's recommendation to not pay any bonuses under the Nortel Annual Incentive Plan (AIP) for 2008.
In addition, Nortel is seeking Canadian court approval to terminate its equity-based compensation plans, including all outstanding equity under the plans, whether vested or unvested, and no further equity will be awarded in 2009.