Toronto stocks are poised for a rocky start Thurday after Nortel Networks said it will slash its workforce by 3,500, or 10%, as it struggles to recover from an accounting scandal that toppled three top executives and led to a criminal investigation and lawsuits.

The Canadian telecom equipment giant also said Thursday it has fired seven finance employees “for cause.”

Nortel made the announcement as it delivered its first glimpse of how the company was performing in the first two quarters of this year.

Nortel said first quarter revenue totalled $2.5 billion, while second-quarter revenue was $2.6 billion.

Estimated earnings per share in both the first and second quarter were between nil and 1 cent. Second-quarter earnings included a 2-cent gain related to a customer contract settlement in South America.


On Wedneday, Nortel closed up 22¢, or almost 5%, to $4.65 on volume of more than 21 million shares.

Meanwhile investors will be keeping an eye on crude oil prices, which rocketed to an all-time high of US$47.50 per barrel Thursday after a fall in U.S. oil and gasoline inventories and continued uncertainty over supply of Iraqi crude.

South of the border, an early report on jobless claims was stronger than expected. U.S. initial jobless claims edged lower last week for a third consecutive time, The Labor Department reported Thursday that 331,00 laid-off workers filed new applications for unemployment benefits last week, down 3,000 from the previous

Economists had forecast an increase of 2,000 claims, after the previous week’s decline of 4,000

There are no major economic releases from Statistics Canada today.

On Wednesday, Toronto’s S&P/TSX composite closed down 9.19 points, or 0.11%, at 8,222.99, after a seesaw session.

Bay Street was hit by conflicting forces of Air Canada and Nortel Networks. On Tuesday, creditors approved the airline’s new business plan, but a day later investors sold off the stock after the Toronto Stock Exchange said it was reviewing the company’s stock to determine if it meets listing requirements.

Air Canada was the TSX’s most active, finishing the day down 12¢ or 40.7% to 17.5¢ on volume of more than 22.7 million shares.

The TSX Venture exchange closed 13.66 points, or 0.92%, higher at 1493.12.

In New York, the Dow Jones industrial average gained 110.32 points, or 1.11%, to close at 10,083.15, its fourth consecutive session in the black. The Nasdaq composite index rose 36.12 points, or 2.01%, to 1,831.37, while the S&P 500 gained 13.46 points, or 1.24%, to 1,095. 17.

Google Inc. set the price of its IPO at $85 a share, far lower than it had anticipated, after reviewing bids in its closely watched auction. Shares could begin trading as early as this morning.