Nortel to demand bonus repayments

Nortel Networks is to demand repayment of about $10 million (€8 million) in bonuses paid to 10 senior executives fired in connection with accounting irregularities at the Canadian telecommunications equipment supplier.

As it announced a further 10 per cent cut in its workforce and a stronger focus on sales and marketing yesterday, Nortel also said that it was also dismissing seven managers who had significant responsibilities for financial reporting.

Nortel's former chief executive officer Mr Frank Dunn, chief financial officer Mr Douglas Beattie and controller Mr Michael Gollogly left the company earlier this year. Nortel did not name the latest seven to leave.

Mr Bill Owens, a former US admiral who took over the helm at Nortel in April, told analysts: "We are striving to make ourselves the most credible, honest and efficient company in the marketplace."

Nortel shares rose by about 7 per cent in early trading to $3.84 at mid-morning in New York.

An audit committee review of its financial results since 2001 will be completed by the end of September. The review, involving 650 Nortel employees as well as outside auditors and consultants, began early this year.

Nortel yesterday reported "estimated limited preliminary unaudited" earnings of between zero and two cents a share in the first half of 2004. Revenues were about $5.1 billion, with a slightly stronger performance in the second quarter than the first.

Nortel repeated that restated earnings for 2003 are likely to be about half the $732 million that was originally reported.

The lay-offs, mostly in North America, will reduce Nortel's workforce to about 30,000.

But Mr Owens said the company plans to hire several dozen more sales and marketing staff and to recruit a chief marketing officer.

The layoffs and the new sales drive are part of a strategy of giving priority to expanding revenues, cutting costs and building up cash reserves.

Mr Mark Bruneau, chairman of Adventis, a Boston-based telecoms consultancy, said that Nortel was "manifestly doing the right things" . - (Financial Times Service)