Nortel finally releases results
Published: 19 Aug 2004 16:10 BST
Financial data for the first two quarters are finally available for Nortel Networks, which on Thursday announced preliminary results plus a wave of firings related to a widening accounting scandal.
Also Thursday, the company said it will cut 3,500 jobs, about 10 percent of its work force.
Nortel, which had withheld results for the first half of the year while reviewing its financials, said that earnings were between zero and 2 cents a share on revenue of $5.1bn (£2.8bn). The company warned that these results are subject to change.
Nortel is still reviewing results for 2002 and 2003, but these results won't be released until the end of the third quarter, the company said.
The company also announced it would reduce its work force by 10 percent in order to improve its cost structure. Most of the reductions will be in North America, said Bill Owens, the company's president and chief executive officer, during a conference call. Roughly 2,500 of Nortel's 36,000 employees are already moving over to Flextronics, which struck an outsourcing manufacturing deal with Nortel earlier this year. At the height of the telecommunications spending bubble, Nortel employed nearly 90,000 people. At the end of the restructuring period, the company will have a head count of 30,000, Owens said.
Nortel also announced on Thursday that it has fired seven more executives who were implicated in the accounting scandal that has rocked the company.
Since March, when the company announced it would be cutting its stated 2003 profits of $732m by half, several agencies have begun investigations. Earlier this week, the company said that the Royal Canadian Mounted Police had launched a criminal investigation.
The widening probes into the company's accounting centre on allegations that key executives pocketed millions of dollars in unearned incentive bonuses last year. Owens said the company hopes to recover $10m from individuals who were paid bonuses during this period. In April, Nortel fired chief executive Frank Dunn, along with the company's chief financial officer and controller.
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