Nortel layoffs: Kerfluffle, reshuffle in telecom land

In Tuesday's IT Blogwatch, we fast-forward to the trouble on the line. And then there's always a flashback ...

Mikael Ricknäs spells out the bloodletting:

Revenue for the quarter totaled $2.32 billion, a 14% decrease from the same period last year, when Nortel reported a net profit of $27 million. Nortel blamed the drop-off in business on the challenging economic environment, as well as competitive pressures and reduced spending by key carrier customers, especially in North America.

And the bad news didn't end with the Q3 results. The Brampton, Ontario-based company also lowered its business forecast for the full year, saying it now expects revenue to decline by about 4% compared with the 2007 level. Nortel previously had said that it expected a decline of between 2% and 4%.

Scott Moritz notes the broader trouble in tech-land:

Like other tech shops that have lowered forecasts, including Qualcomm (QCOM), Cisco (CSCO), Microsoft (MSFT) and Intel (INTC), Nortel cited a sudden slowdown in orders that started in September and has shown no signs of letting up. Corporate spending cuts, tight-fisted phone companies and a weaker consumer demand have sent the tech sector into a deep slump.

Nortel asks you to believe in its change:

"We are acting quickly to become a simpler and leaner company, with the greater flexibility and responsiveness required to manage our business in a rapidly changing marketplace." said Mr. Zafirovski. "We are deeply committed to customers, and are taking the necessary steps to adjust our operating model and become a more customer centric partner that delivers the value and innovation they need to succeed."

Larry Dignan has seen this episode before:

Continuity and Nortel are two words that just don’t quite go together. The latest: Nortel is laying off 1,300 workers and restructuring during an economic downturn (statement, Techmeme). When Cisco delivers bad news about its outlook and economy you get the genuine feeling that there’s a steady hand on the wheel and a plan. Cisco’s competition–Alcatel Lucent and Nortel–seem to be in a perpetual state of turmoil.

To wit: Nortel announced major restructuring plans in 2001, 2004, 2006 and 2007.

Duncan Stewart looks beyond the headlines:

Nortel’s Q3 results are out, and they are just about as rough as I expected in terms of how the company did and what the immediate future looks like...

Trading at roughly US$1, it could be broken up and might yield a decent return. In 1981 in West Vancouver my neighbour up the street had a cool-looking 1972 Super Beetle. It was under a tarp, and hadn’t run for 5 years. I offered him a bottle of single malt (Glenfiddich, $28) and my dad and I dragged it (the wheels didn’t rotate) 100 yards down the hill to our driveway.

It never ran again, but I took it to pieces and sold the various bits for a cumulative $800. Which, if I ignore the cost of the VW manual, various tools, hundreds of hours of my (and my Dad’s) time and the scratched cornea I got when a chunk of metal fell in my eye – is about a 2800% return!

Andrea Orr sees the knives coming out:

...Instead of the deep cuts needed to give Nortel a fighting chance, the company is trimming a little here and there.

What's more, critics say Nortel is falling short on the symbolic moves that shareholders typically look for in companies fighting for survival. Mark Evans, a journalist who has long followed the company and author of the AllAboutNortel blog, says he is troubled by Nortel CEO Mike Zafirovski's failure to cut his own pay. "If Mike Zafirovski had decided to take a $1 per year salary or decline any bonuses in 2009, it wouldn't have meant much for the bottom line, but certainly would have sent a strong signal to Nortel's employees, who are being asked to suck it up," Evans wrote, noting that Cisco Systems Inc. (CSCO) CEO John Chambers in 2001 cut his annual salary to $1 in a show of solidarity with rank-and-file employees.

And finally...

• Steve Jobs poses with computers

Buffer overflow:

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Other Computerworld bloggers:

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• Preston Gralla: Why Linux is like Lotus 1-2-3
• Michael R. Farnum: Former inmate hacks prison network
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Our usual blogwatcher, Richi Jennings, is on holiday. Mike Barton filed today's report.

Previously in IT Blogwatch:

• IBM at Apple's throat
• Wi-Fi Protected Access: More access, less protection
• Votes are in: White space wins