Nortel Hoists the Ax Again

Nortel (NT Quote) CEO Mike Zafirovski is swinging the ax again, cutting 2,900 workers in a bid to focus on growth.

But Nortel shares rose early Wednesday after the company said its fourth quarter will show stable gross margins and revenue in line with the Wall Street analysts' consensus estimate.

This is the second staff cut under a business transformation plan initiated by Zafirovski, a hard-charging executive who took over the stumbling telecom-equipment maker a year and a half ago. It's also the third round of firings at Nortel in as many years.

"These are tough but necessary measures," Zafirovski said in a press release Wednesday. In addition to the layoffs, Nortel plans to move 1,000 jobs overseas to help lower costs.

"We are transforming Nortel, and are focused on building a highly competitive organization that drives innovation and profitable growth," Zafirovski continued in the press release.

The news comes a day after finance chief Peter Currie announced he was leaving the company for the third time, effective in April.

Nortel has struggled a bit of late. Soon after the telecom industry collapse earlier this decade, Nortel seemed to land on its feet with a surprisingly quick return to profit. But as luck would have it, the books had been cooked in part of an executive bonus scandal.

Later, after two restatements, the books appeared to be clean. But a follow-up review uncovered yet another set of accounting blunders, which led to a third restatement, taking the total adjustment tally to $4 billion.

The internal distractions due to the accounting mess effectively kept Nortel out of the broader consolidation trend that swept through the industry as sales fell. Rivals merged, creating bigger players like Alcatel-Lucent (ALU Quote). Ericsson (ERIC Quote) acquired Marconi and then set plans to gobble up Redback (RBAK Quote). And Nokia (NOK Quote) bought the wireless infrastructure unit of Siemens (SI Quote), leaving Nortel out on its own.