Nortel staff in Australia and New Zealand are likely to escape the thousands of redundancies announced at the company's fourth quarter results briefing.
The company's stock plunged around 13 percent on Wednesday to US$9.96 after it reported that its fourth-quarter earnings declined about 3.7 percent to US$3.2 billion. The company reported a loss for the fourth quarter of $884 million compared to a loss of US$80 million in the fourth quarter of 2006; the higher losses were due to a tax-related charge, Nortel said.
To help curb spending and get the company back on track in a restructure plan, Nortel said it will cut 2,100 jobs. It also plans to relocate about 1,000 workers to lower-wage areas.
The job cuts should save the company about US$300 million a year, but the company said it will also take a onetime charge for the plan of about US$275 million.
The job cuts will not have a big impact in Australia, according to Nortel's Australia New Zealand MD, as they will be "primarily focused in North America".
"It's not a global smear," he said, where a percentage of all employees are cut, but rather "a focused restructure".
In fact, Australia will be receiving some new senior executives later this week, according to Stevens. "We're in a pretty healthy position locally," he said, adding that the company's ANZ arm has achieved 30 percent growth in enterprise sales.
Nortel lists the Australian Stock exchange, Macquarie University and Commonwealth Bank among its customers.
The company has been focusing on the next generation of wireless technology, by developing gear using the WiMax technology as well as its cellular equivalent and successor to 3G LTE (Long Term Evolution). However, network builds using these technologies are still in their early days.
In terms of WiMax, Sprint Nextel is the only major carrier in the US to commit to using the technology and its own financial troubles have called into question whether or not the network will actually get built.
Stevens is positive about WiMax in Australia, however. "I look at Australia as an adopter of wireless technology," saying Nortel is talking to OPEL and Unwired about their networks. "I think Australia has a good chance in Asia Pacific region to lead in deployment," he continued.
Recently there have been rumblings that Nortel is in talks with Motorola to combine their wireless infrastructure businesses. Together the companies would be good position to address current GSM network builds in Europe and other parts of the world where that wireless technology standard is used widely. At the same time they could better address markets like the US and South Korea, where mobile operators use CDMA technology.
Nonetheless, Mark Sue, an analyst with RBC Capital Markets, says it could be a long time before Nortel is able to turn things around.
"Nortel's revamped management team is doing the best that they can in our assessment," he said in a research note on Wednesday. "Unfortunately, the prior management team at Nortel left the company with a very damaged balance sheet. And with limited resources and little currency to afford a major strategic rethink, the company may have to resort to a year of basic blocking and tackling."
Suzanne Tindal from ZDNet.com.au contributed to this article.
