Telecommunications gear-maker  Nortel (NYSE: NT) is slicing its payroll by 1,300 jobs, freezing salaries and also extending a hiring freeze through 2009 as the Canadian-based firm struggles to survive in a deteriorating economic environment.

Nortel, which employs some 2,000 people at its RTP campus, announced the cost-cutting measures as part of its third-quarter earnings announcement just after 6 a.m. Monday. Its shares closed at $1.17 on Friday. Shares have plunged from a high of $19.42 over the past year to as low as 96 cents.

Some positions are likely to be cut in RTP, a company spokesperson told

“We expect most of the impacted positions to be in the areas of centralized marketing, sales, operations, services and other parts of the company that are being streamlined under our new operating model,” said Nortel’s Jay Barta. “We are not providing a regional breakdown of the restructuring impact. There will likely be reductions in every region, including locally in RTP.”

However, Barta said the Triangle operation remains an important part of the company.

“RTP remains Nortel’s third-largest location in North America and an important campus for the company, housing key business activities including customer service and support, finance, IT, HR, sales and marketing, and research and development,” he said.

The layoffs had been widely predicted. However, between 3,000 and 5,000 job cuts had been projected by the Wall Street analysts who follow Nortel. Nortel has already slashed hundreds of jobs this year. Its work force is some 32,000. In 2000, Nortel’s payroll reached 90,000 before the telecom industry went bust along with the "dot com" Internet sector.

As part of a company reorganization, Nortel also said four top executives would leave the company as of Jan. 1: Chief Marketing Officer Lauren Flaherty, Chief Technology Officer John Roese, Global Services President Dietmar Wendt and Executive Vice President Global Sales Bill Nelson.

“It is always difficult to see colleagues go, but we made the necessary decision to consolidate our executive layer and reshape Nortel,” said Nortel Chief Executive Officer Mike Zafirovski in a statement.

Other management changes include the retirement of Chief Legal Officer David Drinkwater, who will retire and become an adviser on Feb. 28 of next year, and Chief Compliance Officer Robert Bartzokas. He retires at the end of this year.

In a separate filing with the Securities and Exchange Commission, Nortel also said it would “shift” some 200 jobs “from higher-cost to lower-cost locations.”

The moves come after a quarter in which Nortel lost $3.4 billion, or $6.85 per share. In the same quarter a year ago, Nortel posted a $27 million profit equal to 5 cents per share.

Analysts had forecast a 30-cent-per-share loss, according to The Associated Press.

"We are acting quickly to become a simpler and leaner company with the greater flexibility and responsiveness required to manage our business in a rapidly changing marketplace." Zafirovski explained. "We are deeply committed to customers and are taking the necessary steps to adjust our operating model and become a more customer-centric partner that delivers the value and innovation they need to succeed."

Zafirovski said that Nortel would “flatten” its corporate structure as part of the plan.

The firm is also suspending its preferred share dividend to save cash.

Nortel recently also said it would seek to sell its Metro Ethernet business unit. That has yet to occur, however. In its report, Nortel said the group’s status had not changed.

“Reducing costs and preserving cash are priorities,” Nortel said in a statement. “Actions were announced today that, together with ongoing restructuring and other cost-reduction measures, are expected to reduce annual gross costs by approximately $400 million in 2009.”

Nortel also said it would take a non-tax charge of $3.21 billion.

The grim news from Nortel was not unexpected. Zafirovski had warned on Sept. 17 that the company faced a tough economic challenge.

"In September, we signaled our view that a slowdown in the market was taking place,” Zafirovski said Monday morning. “In the weeks since, we have seen worsening economic conditions, together with extreme volatility in the financial, foreign exchange and credit markets globally, further impacting the industry, Nortel and its customers. We are therefore taking further decisive actions in an environment of decreased visibility and customer-spending levels.”

According to Zafirovski, Nortel will change its management structure to create what the company called “more vertically integrated business units.” These groups are to have “end-to-end decision responsibility” for performance, service and innovation, Nortel said. The goal is to “accelerate decision-making,” improve accountability and provide what the company called “razor sharp focus on the specific needs” of customers.

Nortel’s revenues for the quarter plunged 14 percent from the same quarter a year ago to $2.32 billion. Year-to-date, Nortel revenues are down 1 percent from 2007.

Operating expenses also decreased by $138 million from a year earlier. Reflecting recent cost-cutting moves, Nortel shaved expenses by $125 million from the previous quarter.

Nortel has cash on had of $2.3 billion.