RIYADH, 23 July — The huge losses incurred by the Canadian-based Nortel Networks Corporation, as a result of the general slump in the Information Technology market, is not likely to affect its investments and operations in the Kingdom, a senior Nortel official said.
But Kingdom’s IT circles fear the losses incurred by this major investor in the Saudi telecom and information sector, is likely to reflect on its activities in the Kingdom. They also warned that the company’s current woes is likely to affect the level of training and employment of local hands in the Kingdom.
The jitters in the IT circles were triggered by Nortel reporting a loss of $19.4 billion, at the rate of $6.08 per share, on Saturday.
“The losses, however, do not have any impact on the company’s investments in the Kingdom,” said George Sabali, a senior official of the company.
He said the Kingdom provided an ideal business climate for the company to operate and invest in. The operations here is witnessing an expanding workforce, he added.
The company, which laid off 30,000 employees worldwide, is attracting an increasing number of workers in the Kingdom because of its success here, Sabali said. He also said that company’s unsuccessful operations outside the Kingdom led to the redeployment of some of its workers to the Kingdom.
He said the company’s operation in the Kingdom is currently aligned with the Saudi Telecommunication Company as part of a framework contract.
Nortel’s current contract with the STC is the first one between the two companies. It was only after Lucent Technologies had failed to fulfill its obligations, that Nortel returned to the Kingdom in 2000 to undertake several STC projects. The company also helped the Saline Water Conversion Corporation, National Commercial Bank and Saudi Aramco, National Guard and Air Force.
STC officials are worried about the Canadian company’s financial upheavals because it is being considered by STC for several major contracts.
The net loss of Nortel Networks reached $16 billion while the company’s profit in the same period last year stood at $637 million. The revenue from continuous operations fell from last year’s $7.2 billion to $4.6 billion in the same period this year.
The STC authorities are also keeping a close watch on the investment health of foreign companies in the Kingdom following a global slowdown, according to an STC source.
The source also warned that the company’s financial woes and large-scale layoffs worldwide would reflect on the scale of training and hiring of locals in various projects the company is overseeing in the Kingdom.
