The fallout from the accounting scandal at Nortel Networks Corp. continues.
The company said Thursday that it will cut 3,500 jobs, or 10% of its work force, in an effort to reduce annual expenses by an additional $450 million-$500 million.
Most of the job cuts will be in North America, largely from administrative and research-and-development functions, according to AP.
"We are organizing Nortel around the converged networks of the future," CEO William Owens told AP. "The cuts are not taken across the board, but are taken in very focused ways.”
AP also reported that seven Nortel financial managers were fired. In late April, the struggling equipment vendor terminated CEO Frank Andrew Dunn, chief financial officer Douglas Beatty and controller Michael Gollogly.
According to Reuters, the company will demand the repayment of $10 million in bonuses paid to the 10 fired executives. On a conference call, Owens said, "10 people who have been relieved for cause, including the three previous executives announced back in April, will have approximately $10 million of bonuses that we will demand repayment from.”
“Each of these 10 individuals had primary or substantial responsibility for the company's financial reporting," Nortel said in a prepared statement, adding that they knew or should have known that statements of income violated generally accepted accounting principles and misstated results.
Following the cuts, Nortel will be left with about 30,000 employees, down from 95,500 at its peak in 2000, according to AP.
The company is also restructuring from four business units into two, concentrating on equipment and services for telecommunications carriers and large enterprise systems.