Thousands to lose jobs at Nortel

Financial data for the first two quarters is finally available for Nortel Networks, which on Thursday announced preliminary results plus a wave of firings related to a widening accounting scandal.

The company also announced it would attempt to recover $10m of bonuses paid to executives last year.

Nortel said it will cut 3,500 jobs, about 10 per cent of its work force.

The company, 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. It warned that these results are subject to change.

Nortel is still reviewing results for 2001, 2002 and 2003, but the revised numbers won't be released until the end of the third quarter, the company said.

The company also announced it will reduce its work force by 10 per cent in order to improve its cost structure. Most of the reductions will be in North America, Bill Owens, the company's chief executive officer, said 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 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 are centring 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.