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Electronics Production | June 27, 2006

Nortel shed 1,100 in North America

In connection with its previously announced Business Transformation plan to increase competitiveness by improving operating margins and overall business performance, Nortel announced a net reduction of approximately 1,100 positions globally.

Nortel also announced a series of new initiatives to create a world-class Operations organization. Today's announcement is the latest in a series of actions Nortel is taking to achieve a targeted operating-margin expansion in excess of US$1.5 billion in 2008. The latter two actions result in a reduction of approximately 1,900 positions globally and the creation of approximately 800 new positions in Operations Centers of Excellence. Total cost, both the charge to the income statement and cash, for the Global Operations restructuring and the organizational simplification, is estimated to be approximately US$100 million over the next two years, of which approximately US$35 million of the charge to the income statement is expected to be taken in the second quarter of 2006. The cash cost is expected to be incurred equally over a two-year period. Annual savings from these actions is targeted to be approximately US$100 million in 2007 and approximately US$175 million by 2008.
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