Nortel quantifies target reductions in workforce

Outlining measures to meet the objectives set out by Mike Zafirovsky, Nortel's business transformation plan is set to reduce headcount by 2900, 70% of which will take place in 2007. The reductions will be mainly in the general & administration and research & development functions. This is due to changed product mix, technology mix and out of efficiency improvement. In addition 1000 positions mainly in the R&D and operations functions will be shifted from high-cost to low cost locations, 40% of which will take place in 2007. The key countries to benefit from this shift are China, Mexico and Turkey. John Roese, CTO of Nortel explained that this transfer will help the company target the emerging markets better.

John went to offer financial guidance. He was speaking very fast, as a result I missed most of what he said. The key metrics that stayed with me are: 8.8% revenue growth in Q4, 2006, gross margins in excess of 40% for the first time in several years, and free cash to the tune of $900 million.

The area that John loves to discuss i.e technology came next. He outlined Nortel's focus on 4G wireless technologies such as mobile WIMAX, next generation carrier ethernet and next generation enterprise communication. He invited to view the first live LTE demonstration at 3GSM in Barcelona in a week's time and promised that the technology will only improve. John cheekily admitted to the excess noise created by getting BT's carrier ethernet contract to become a critical part of its 21 CN plan.

Finally the area that interests me the most, enterprise. John stopped to discuss their ICA with Microsoft. He seemed to dodge the question of where the alliance stood in the wake of the Microsoft-Motorola alliance. He outlined that while Nortel would contribute with telephony & real-time communication feature set and the signalling software, Microsoft will bring SOA, GUI, applications, presence amd collboration capabilities to the table. He explained that both vendors were free to choose other alliances.