Nortel says it will cut 3,200 jobs world-wide in the next few months as the financially strapped company undergoes restructuring.
Although a company spokesperson says Nortel hopes this will be the total number of layoffs, the company cannot guarantee anything. The layoffs total roughly 10 per cent of Nortel's global workforce and will affect Ottawa employees.
Nortel expects to carry out the job cuts over the next several months. Another 1,800 employees will also be let go as part of reduction plans announced last year, bringing the total number of job cuts to 5,000. The company says employees who lose their jobs won't be awarded severance pay.
Although there is no word on how many jobs will be lost in the capital, Ottawa offices have been hit with one-quarter of global layoffs in the past, which means the capital could lose 800 jobs.
"I was surprised the number to let go was so low. We had been expecting it to be much higher, perhaps double that number," said Paula Martin, who heads a group of laid off employees who want their severance pay.
Layoffs in Ottawa are expected to start on Thursday, when about 120 employees who work with the now shut-down WiMAX division will be let go.
Company calls layoffs tough decision
The company, which filed for bankruptcy protection in January, says it needs to make significant changes to help it restructure in the midst of an unprecedented economic environment.
CEO Mike Zafirovski says it was a tough decision to make the cuts, but adds they are necessary to help the company emerge from creditor protection.
"There is nothing more difficult than notifying employees, and Nortel is extremely conscious of the personal financial burden this will cause affected employees and their families," Zafirovski said in a prepared statement.
"Nortel is a company driven by people and innovation. But with the unprecedented economic environment and resultant impacts on revenues, significant changes are required to regain our financial footing."
Decision helps 'minimize risk'
Meanwhile, Nortel spokesman Mohammed Nakhooda said company policy prevents him from publicly disclosing which operations are being affected by the layoffs, however he did say that the majority are in North America.
"We are approaching our reductions in a careful and disciplined fashion in order to minimize risk of impacts to our customers," he said in an email response to The Canadian Press.
"This is a critical first step towards our ability to achieve a more focused and competitive position with a sounder financial base."
The company also announced Wednesday that the board has cancelled all pay programs that involved stock. In an interview earlier this month, Zafirovski told CTV Ottawa the company's stock is "worthless now and will be forever."
However, Nortel says it will continue an incentive program for rank and file employees who excel at day-to-day work.
Analysts not optimistic
Analysts, meanwhile, weren't optimistic about the layoff announcement on Wednesday. Some said another round of job cuts won't lift the telecom equipment maker out of its financial problems.
"I would have more hope (in the company) if they had a strategy -- or if they at least revealed that they have a strategy," said Andy Woyzbun, the lead analyst at Info-Tech Research Group.
"The question is, where are you cutting? If you're cutting randomly, that's dumb. If you're selectively reducing, and you've decided which parts of your business you're going to feed and which you're going to starve, that to me would be hopeful."
In Ottawa, the president and CEO of the Ottawa Centre for Research and Innovation said he thinks the company's latest round of layoffs is not reflective of the final figure for cuts.
But Jeffrey Dale said without knowing the company's business plan, he can't predict where the cuts will happen.
In the meantime, he said his agency will do everything it can to ramp up services to help laid off employees.
Dale said he will also be looking for other levels of government to help provide better ways for innovative laid off workers to start up new companies.
"I am calling on the community to get involved, to help out with ideas or suggestions. If the community has helped you, its time for you to pay back," Dale told CTV Ottawa.
Investors greeted the latest round of layoffs with a muted response Wednesday.
Shares in the company remained steady at 10.5 cents on the Toronto Stock Exchange in low volume.
With a report from CTV Ottawa's Paul Brent and files from The Canadian Press
