Nortel to shed 10,000 staff

Networking giant Nortel is slashing staff numbers to regain ground lost after it incurred second quarter losses of $19.2bn due to market slowdown.

On the back of the announcement, shares in the company plummeted by 16 per cent to $8.90.

Nortel said it would slash an extra 10,000 jobs, a grave announcement following the 20,000 pink slips it has already issued so far this year.

The company is also dropping its DSL equipment manufacturing business in response to a "significant reduction" in demand for communications.

The company reported operating losses of $1.5bn alongside charges against earnings of $12.3bn.

Chief executive John Roth said the "capital markets have significantly reduced the flow of funds to service providers".

But the cutbacks should bring savings of around $3.5bn a year, he added.