Nokia, Digex, Tut downsize
Susan Rush
from CED Broadband Direct, August 7, 2002
Although some good news is coming out of the latest
round of quarterly financial reports, many telecom companies are
still cautious. Nokia, Digex Inc. and Tut Systems Inc. are reducing
their staffs to pare expenses as demand continues to wane.
Nokia plans to shed 900 jobs from its networks division by the
end of the year. The market for telecom infrastructure remains
week, and Nokia is making the cuts to better align the organization
with current demand. The cuts, which will affect employees in
Nokia's network delivery and maintenance functions, will be spread
out among employees around the world, Nokia said. The company
did not outline how much it would save as a result of the headcount
reductions.
Trying to distance itself from scandal-ridden WorldCom Inc.,
Digex Inc. is taking steps to become financially independent.
The managed service provider is reducing its staff by roughly
200 people. The 20 percent staff cut is designed to align expenses
with revenue. Affected employees will receive a severance package
based on their time with the company. The cuts will be completed
by the end of the week.
In June, Digex laid off 86 employees, and put George Kerns at
the company's helm. WorldCom owns 61 percent of Digex shares and
has a 94 percent voting stake in the company. Digex, however,
insists that its cost cutting measures are not related to WorldCom's
troubles.
Tut Systems Inc. is cutting a bit deeper than Nokia or Digex,
with a planned reduction of 39 percent of its work force. The
cuts will mainly take place in Tut's engineering, operations and
general and administrative departments. In addition to the layoffs,
the company plans to shut its Bridgewater, N.J. design center.
Theses actions will bring Tut between $5 million and $6 million
in annual savings. During the third quarter, Tut will take a $1.6
million charge -- $0.5 million for severance packages and $1.1
million to close the design center. The VDSL systems provider
said it has the financial resources to operate beyond the next
12 months.
The company says it remains committed to its line of products,
including the Expresso, IntelliPOP 5000 and IntelliPOP 8000.
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