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Nortel to trim work force by almost 10 percent

An additional 3 percent of staff positions will be "offshored" as part of the company's $1.5 billion cost-cutting drive.

Nortel Networks will lay off almost 10 percent of its work force and replace another 3 percent of staff with workers in low-cost countries, the company announced this week.

The cuts, which will affect 3,900 individuals, were described by Nortel's chief executive, Mike Zafirovski, as "tough but necessary." They are part of Zafirovski's wider "business transformation plan," with which he aims to cut $1.5 billion in costs by 2008. Along with the staff cuts, Nortel will reduce its research-and-development spending from 17 percent to 15 percent of revenue.

Following the cuts, which are scheduled to take place through 2007 and 2008, Nortel will employ just one-third the number of workers it had after the dot-com boom in 2000. Revenue had already shrunk by two-thirds between 2000 and 2005.

Nortel is facing increased pressure from competitors, some of which are merging (as did Alcatel and Lucent Technologies), and some of which are new rivals. Most of the latter are low-cost suppliers from several Asian countries, including China.

Alcatel-Lucent said on Friday it would revise upwards its previously announced job cuts from 9,000 to 12,500.

Richard Thurston of ZDNet UK reported from London.