Nortel Update May Include Layoffs (up to 5000 jobs)

[UpInArms]

http://www.lightreading.com/document.asp?site=lightreading&doc_id=57522

Nortel Networks Ltd. (NYSE/Toronto: NT - message board) status update tomorrow could reveal staff cuts that number as many as 5,000, an analyst following the company says.

Granted, the update likely won't yield much new information -- the company has already said it is having trouble meeting its gross margin targets and keeping its operating costs below 40 percent of overall revenues (see Nortel: Material Margin Madness ).

But tomorrow could be the day that thousands get the ax as the company tries to adjust its business. Per employee, Nortel's SG&A (selling, general, and administrative) expenses are "anywhere between 53 percent to 70 percent higher than its competitors," writes Scotia Capital analyst Gus Papageorgiou, in a note to clients this afternoon. The competitors Papageorgiou cites include Lucent Technologies Inc. (NYSE: LU - message board) and LM Ericsson (Nasdaq: ERICY - message board).

Nortel has already hinted of a headcount reduction, but Papageorgiou is one of the few to date that have ventured to put a number to the damage. He writes that staff reductions of approximately 5,000 -- with a $125,000 cost per head -- would take Nortel's SG&A expenses down by $617 million, making them only 14 percent of revenues, a figure closer to Lucent's and Ericsson's figures.

The analyst predicts most of the cuts will be in the U.S., where the labor costs more and the labor laws are more conducive to mass layoffs.

...more...

[WLKjr]

1. There goes the Bush Jobs Data Down The Toilet Again

:hurts:

[SoCalDem]

2. UPDATE!!!!

You're fired..:(

It's getting ridiculous, folks..

How are all these people going to live??buy houses??cars??college for their kids?? medical insurance??

We are in a meltdown, in case no one has noticed

[UpInArms]

3. definitely noticing SoCalDem

and don't you just love this line?

the U.S., where the labor costs more and the labor laws are more conducive to mass layoffs

Where is the representation for the workers? Not in this reThuglican run government, that's for damn certain.

[tXr]

4. *'s 'job growth' is a one way street -

going the wrong way! :grr:

[Yavin4]

5. They're Not

We are setting records for bankruptcy every day.