Nortel may sell its optical components group
Like other companies in the industry, Nortel has been hit hard by drastically reduced carrier spending over the last 18 months. The beleaguered Canadian telecom equipment maker has now cut its break-even sales target to $3.2 billion from $3.5 billion for the fourth quarter of 2002.
Nortel has been losing market share in the optical components business for several quarters, with some industry analysts putting its share at the end of 2001 at just 7%, compared to 27% in the third quarter of 2000.
Specific plans to restructure its long haul business include potentially selling and/or re-sizing the optical components division, which manufactures mostly active components such as source and pump lasers, detectors, and transmit and receive modules.
Nortel says it does not expect a meaningful recovery in the long haul optical market before late 2003 or early 2004 and its latest actions are intended to bring its various business units into profitability at current market levels. The company intends to streamline its business to focus on optical switching, next-generation photonic transport capabilities and end-to-end network management and intelligence. The realignment of its optical business is expected to be completed by the end of the third quarter 2002.
“We are aligning our optical business model to where we see the industry going to ensure we are well positioned when spending resumes,” said Nortel Networks president and CEO, Frank Dunn. “Optical backbone networks are the foundation of multimedia broadband networks and we expect Nortel Networks to remain an industry leading provider of end-to-end optical networking solutions. We will focus on our leadership in optical systems and work with our partners to ensure ready access to high performance, low cost optical components.”
Nortel, which employed 94,500 at is peak at the end of 2000, expects the cutbacks to further reduce its workforce to about 42,000 compared to previous estimates of 44,000.
