Nortel has been struggling to adjust to the downturn in demand which has hit other major firms in the telecoms sector.

The Canada-based firm, which is the second-biggest maker of telecoms equipment in North America, cut about 50,000 jobs last year, or half its workforce.

It also outsourced much of its production to save costs.

Moving target

Last month Nortel predicted its workforce would be pared to 44,000 by the restructuring.

It has now cut that figure down to 42,000, saying it does not see any prospect of "meaningful" recovery in the fibre optics parts market before late 2003.

The company said it would take a charge of $600m to pay for the latest job cuts, probably in the accounts for the second and third quarters of this year.

It had previously announced a charge of $150m to be taken in the April to June accounting period.

Revenue forecast

It expects revenue for the three month period to be at best unchanged from year-earlier, or down 5%.

The telecoms giant said it has enough cash and credit available to pay for the layoffs without needing to renegotiate its bank loan agreements.

It cut its target for revenue in the final three months of this year to $3.2bn from $3.5bn.