Nortel Networks will cut 3,200 jobs as it continues to reorganize under bankruptcy protection, the latest in a series of signs that the telecommunications equipment vendor is struggling to regain its footing as it restructures.
The Canadian company said that the cuts would happen over the next several months. Nortel said its board has approved a plan to not pay any bonuses for 2008, and that it was seeking Canadian court approval to end its equity based compensation plans, including stock options, restricted stock units and performance stock units. Nortel also said it was continuing its Annual Incentive Plan for 2009, but would make changes to permit quarterly payouts instead of annual payouts.
"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 CEO Mike Zafirovski said in a statement.
Nortel, which was once one of the strongest telecom companies in North America, filed for bankruptcy in mid-January. The company has until May 1 to finish restructuring and reorganizing its debt. Since declaring Chapter 11 bankruptcy, the company has exited the mobile WiMAX business, which significantly impacted the business of its partner Alvarion. Nortel also has decided to postpone the sale of its Metro Ethernet Networks business and pledged to cut more jobs and reduce costs.
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