Real Kato Blog: Nortel Layoff Rumors

Every now and then, I get Google hits from people looking for information about layoffs at the Nortel RTP site. As a public service, I'm posting what I know about it.

From what I've heard, there are going to be layoffs at the Nortel Networks R&D facility in RTP, North Carolina. Actually, they've already started.

I don't work for Nortel any more, so I have no fear about getting Dooced for writing about them. And I don't think I can get sued for revealing company secrets, since (a) this is largely just rumor and speculation, (b) this is newsworthy enough that I would have first amendment protections, and (c) I have no reason to believe that any of this is supposed to be secret anyway.

So here's what I've heard.

Nortel is in the midst of a large-scale layoff. It started a few months ago, and will probably be complete by around September. The cuts will largely come from R&D, meaning that software and hardware engineers will be let go. I've heard anywhere from 33% to 100% of the main RTP facility will be cut; I believe that means anywhere from 700 to 2100 people.

Right now, many engineers that work there are training their replacements. In China. They're also working to complete a few product releases, though it's unclear whether the funding will run out before the projects actually get done. One of the areas that seems certain to get hit is Succession, which is Nortel's voice-over-packet (ATM and IP) technology program. (I used to work on the Succession program when I was at Nortel.)

Among the rank-and-file, there is some worry now that Nortel's historically-generous severance package will be cut back. That worry is leading some people to quit voluntarily, while there are still job openings available at other companies.

As far as what this means for the future of Nortel, I don't know. Cutbacks are usually never a good sign, but perhaps this means Nortel will shed some of its bloated and expensive programs so it can focus on its bread and butter "core competencies".

Nortel's stock last traded at $2.68 per share, more than 50% off its 52-week high.

Disclaimer: I am a Nortel stockholder. Unfortunately. This should not be construed as investment advice. If you do take this as investment advice, you're an idiot, because I'm the worst investor in the history of mankind. Every stock I buy immediately plummets the next day, probably because there are alarms on Wall Street that announce to everyone that I've bought the stock. You have been warned.

Update, 15 January 2008: Nortel has officially discontinued severance pay after filing bankruptcy. See this post.

Permalink 2 Comment

Posted by Ken in: commentary

Comments

Comment #1 from Nicholas (Guest)
2005 Apr 25 - 6:28 pm : #

That sucks. I've only lived through limited lay-offs. The movement of production to China can directly effect any of us. Though hasn't Nortel been laying off for a while? They used to be a big RTP employer.

Comment #2 from Ken (realkato)
2005 May 3 - 9:37 am : #

I've posted an update here.

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