Nortel Cuts Few Jobs Than Expected; Four Senior Executives Depart

After speculation has been running rampant that Nortel (NT) was going to slash between 3,000 to 10,000 positions, it will be interesting to see how investors and analysts react to what can only be seen as a modest plan to eliminate 1,300 workers, or 4% of the workforce.

With Nortel deciding to cut fewer employees than expected, the HR spotlight will be focused on the departures of four senior executives: chief marketing officer Laurent Flaherty, chief technology officer John Roese, global services president Dietmar Wendt, and executive v.p. global sales, Bill Nelson. In particular, the decision to get rid of Roese will be scrutinized given he came to Nortel with little carrier experience.

This can only be seen as a major disappointment for CEO Mike Zafirovski, who recruited the four executives as part of his extensive management overhaul when he took over from ex-CEO Bill Owens.

The 1,300 job cuts are part of a plan to slash costs by $400-million in 2009, and will include the elimination or consolidation of executive and management positions; salary and hiring freezes, and “other broad” actions to cut costs and discretionary spending.

“We are acting quickly to become a simpler and leaner company, with the greater flexibility and responsiveness required to manage our business in a rapidly changing marketplace.” said Zafirovski said in a statement.

As far as the sale of the metro Ethernet network unit, nothing was announced so you can read into that what you will.

Nortel also unveiled a new operating structure that will go into place on Jan. 1, 2009:

• An enterprise business headed by Joel Hackney, which will include voice, data and unified communications technology, advanced software and the associated services and solutions.
• Two business units - carriers networks and metro Ethernet networks - led by Richard Lowe and Phillippe Morin, respectively. Both units will be supported by a global sales organization led by Darryl Edwards.

Here’s the Nortel press release, which includes the third-quarter results. The financial highlights include a cash balance of $2.3-billion and the decision to suspend dividend payments on its series 5 and 7 preferred shares.

Comments

[joremero:]

what happened to allaboutnortel????

2008 Nov 10 10:35 AM

[beenhereb4:]

Looks like the new reorg gives them the same organization that NT had in the mid-80s.

2008 Nov 10 10:37 AM

[longoil:]

It is about time they got rid of John Roese et al. I am still trying to figure out the rational behind the following nonsensical acquisitions.

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2008 Nov 10 12:16 PM

[Former Nort...:]

The decentralization of the company sure smells like a bust up is on the horizon, doesn't it? While I agree with beenhereb4's comments, the big difference this time is that there's no one at the helm that is from the legacy days. Z and crew have absolutely NO appreciation of Nortel's history. He and the rest of his worthless recruits will take their golden parachutes and bale. The BofD should fire the whole lot of them and cut to the chase, sale wise.

Nortel use to be a great company. The people there (below senior management) are great and deserve better than what they've gotten from these alleged golden boys.

2008 Nov 10 03:35 PM

[beenhereb4:]

NT Corporate during the great acquisition phase became infatuated with a complicated matrix organizational structure that continued with centralized R&D control and geographical sales organizations that reported to corporate instead of the line units. A bloated, non-responsive, corporate structure resulted that engendered finger-pointing and ownership of issues and profitability by no one. All in the name of efficiency improvement. One must ask simple questions like "Who is responsible for the profitability of that product?" and "Who is responsible for growing market share in that line of business?" All the matrix can think about is how big is the next restructuring plan. In business as in nature if you're not growing then you're dying, there is no steady state.

2008 Nov 11 07:16 AM