In a tough warning to financial markets, Nortel has announced plans to slash 10,000 jobsand predicted a big second quarter loss as customers cut back on purchases of telecommunications equipment.
In a statement issued before the US markets opened today Nortel, the world's largest supplier of telecom equipment, said it expects a second-quarter loss of $19.2 billion after charges incurred in the restructuring and streamlining of the company.
Before those charges, Nortel said it would report a loss of $1.5 billion or 48 cents a share on revenue of $4.5 billion in the second quarter.
The new job cuts, on top of 20,000 cuts announced in April, mean the one-time star of the Canadian stock market will have cut one third of its work force.
"We have had better times. Is this the end of it? God we sure hope so, this is a brutal experience", said Mr John Roth in an interview with Reuters this morning.
Facing the prospect that customers might not flood back until the second half of 2002, Nortel also said it was adjusting intangible assets by $12.3 billion and halting dividend payments.
It said it had signed an agreement for a $2 billion unsecured credit facility to give it flexibility to execute our work plan over the next 18 months.
"The crystal ball is still pretty bad. Customers are working hard to curb their purchases and that behavior is going to go on for some time", said Mr Roth. He said Nortel would not provide guidance for the third quarter or the full year at this time.
The news hit Nortel's stock price in pre-market trading and put tech stocks in other countries under severe pressure. Shares in Finland's Nokia, which has already warned of sagging sales, dropped 6 per cent in Helsinki.
Analysts revised down their forecasts and their stock targets for the company.
Nortel was trading at $9.50 in premarket dealings in New York, down from yesterday's close of $10.60. The share is worth just over 10 per cent of its year-high of around $89.