BRAMPTON, Ontario, Oct. 3 (UPI) -- Nortel Networks, the Canadian network equipment giant, announced late Tuesday that it expects to report a third quarter net loss of $3.6 billion and will slash 20,000 jobs.
The company added that it had concluded an executive search, and current chief executive office John Roth would be replaced by Frank Dunn, current chief financial officer.
The company's latest cuts are part ongoing effort to slash jobs, close some product lines and sell various business units, in order to scale back in proportion to a markedly smaller market for telecom switching gear and fiber optic components.
Nortel will have about 45,000 employees after the cuts, less than half the 94,500 employees it had at the beginning of the year.
The company said that it now expects third quarter revenue of $3.5 billion, compared to sales of 7.3 billion for this same period a year ago, and a half-billion less than expected by industry analysts surveyed by Thomson Financial/First Call.
The Canadian network giant also said it expects to report a pro forma loss, which excludes one-time items, of $910 million
"While the magnitude of the market adjustment from previous levels of expenditures has been challenging, we believe we are beginning to see some early signs that the expected capital spending by service providers is approaching sustainable levels," said Roth, the outgoing chief executive officer, in a statement.
"Nortel Networks has made excellent progress on our work plan to drive towards breakeven and positive cash flow," he added.
Roth, who has been with the company since 1969, will step down Nov. 1. He has held the position of chief executive officer since 1997.
He will stay on as vice-chairman of the board until 2002.
Nortel said in its statement that it expects to be able to break even in the first quarter of 2002, on revenues "well below" $4 billion. In earlier forecasting, the company expected to break even on anticipated revenue of $5 billion.
The company also said that 10,000 of the planned job cuts would come from the sell off of various business units, with the additional 10,000 cuts coming from mass layoffs by the end of October.
Shares of Nortel were off 7 cents, or 1.32 percent, to $5.22 in early afternoon trading of almost 15.3 million shares on the New York Stock Exchange.
