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Nortel To Cut 3,200 Jobs

As part of its massive reorganization, the telecom equipment supplier will cut about 10% of its workforce and eliminate bonuses.

Nortel said it will cut 3,200 positions worldwide and adjust its employee compensation plan in order to cope with the struggling economy.

The telecommunications equipment supplier has been struggling for years partly because of executive bonus scandals, and the economic downturn has hit the telecom infrastructure industry hard. Nortel filed for Chapter 11 bankruptcy protection last month, and the cuts come in addition to the previously announced 1,800 layoffs.

"There is nothing more difficult than notifying employees, and Nortel is extremely conscious of the personal financial burden this will cause affected employees and their families," said Mike Zafirovski, Nortel's president and CEO, in a statement. "Nortel is a company driven by people and innovation. But with the unprecedented economic environment and resultant impacts on revenues, significant changes are required to regain our financial footing."

In addition to the workforce reductions, Nortel will not pay any bonuses for 2008, and it's seeking to further cut incentives by getting rid of equity-based compensation plans. As part of its restructuring efforts, the company is selling off assets to cut costs, and Radware recently purchased its Alteon WebSystems division for $18 million.

"Tough decisions are being made to restructure the company and work towards a successful emergence from creditor protection," Zafirovski said.

Rivals like Alcatel-Lucent, Cisco, and Ericsson have also felt the effects of the faltering global economy, but the companies have been able to adjust by reducing spending and securing contracts with large telecommunications companies. Verizon Wireless recently outlined its plans for a nationwide deployment of its 4G network using Long Term Evolution technology, and it chose Alcatel-Lucent and Ericsson as its main suppliers of infrastructure.

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