Australian workers spared from 2,100 Nortel job cuts

The networking vendor plans to terminate about 6.5 per cent of its workforce after falling profits over the past couple years prompted the company to instigate a "business transformation plan".

According to Nortel’s A/NZ managing directing, Mark Stevens, the job cuts form part of a business transformation plan the company adopted in hopes of reducing operating costs and improving Nortel's place on the global market.

“We’re actually the most profitable we’ve been since the year 2000 and this has been a direct result of the business transformation Nortel has been undertaking,” he said.

“It’s [job cuts] not going to impact operations here in Australia or Asia. I’m positive we are on the right path in driving the business forward towards profitability.”

Nortel expects North American workers to take the brunt of the planned workplace cuts which will represent savings of up to $300 million a year for the company.

Nortel said it would also move about 1,000 jobs to countries where there was higher growth and lower labour costs.

Nortel posted a fourth quarter loss of US$844 million compared with a loss of US$80 million for the same period in 2006. Much of that loss was precipitated by a US$1.1 billion non-cash charge related to changes in the firm's Canadian tax requirements.

Revenue, meanwhile, fell to US$3.2 billion from US$3.32 billion a year earlier.

Despite the loss, Nortel CEO Mike Zafirovski, said it was Nortel’s best Q4 performance in years.

"In a period of significant change for our industry, we have now reported six consecutive quarters of strong year over year improvement in operating margin," Zafirovski said in a statement. "Although our fourth quarter operating margin was below target, it is the highest in 12 quarters."