TORONTO – Canadian telecom equipment maker Nortel Networks Corp. said yesterday it plans to cut 2,900 jobs, or about 8.5 percent of its work force, over the next two years in an effort to cut costs.
The job cuts, 70 percent of which will occur this year, and other cost-cutting measures are expected to save about $400 million a year, with about half the savings realized in 2007.
The company also plans to shift about 1,000 positions from higher-cost to lower-cost locations, with about 40 percent of this taking place this year.
Nortel said its new business model requires a “significant reduction” in administrative expenses, but added that its research and development investments, while reduced, would be maintained at 15 percent of total sales.
Nortel Networks' U.S. shares rose $2.33, or 8.99 percent, to close at $28.26 on the New York Stock Exchange.
