Nortel set to slash UK jobs

Nortel Networks is set to slash a further 3,500 jobs from its worldwide operations, with many staff expected to go from its UK operations.

The cuts come as Nortel looks to shed its optical components business as a way to cut costs in its struggle to return to profit.

The company said that it does not expect a "meaningful" recovery in spending on optical equipment before late 2003 or early 2004, and is reorganising its optical operations.

The cuts will come as Nortel either sells off its optical parts business or makes deep cutbacks in the operations.

Although getting out of the components business, the company said it would maintain the development of optical switches and related technologies.

"We are aligning our optical business model to where we see the industry going to ensure that we are well positioned when spending resumes," chief executive Frank Dunn said in a statement.

The latest reorganisation will result in a charge of $600m spread over the second and third quarters, the company said.

Nortel has cut about 50,000 jobs since the beginning of last year, and employed 47,000 people at the end of the first quarter. The latest cuts will reduce that to around 42,000 worldwide.

The company said it was still on target to break even in the fourth quarter and that losses would improve in the second quarter.

But it warned that revenues in the second quarter would be flat or down five per cent from the $2.9bn the company reported in the first quarter.