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Nortel Networks 4th-quarter loss widens on restructuring and tax charges; cutting 2,100 jobs

Nortel Networks 4th-quarter loss widens on restructuring and tax charges; cutting 2,100 jobs

Nortel Networks Corp. said Wednesday its fourth-quarter loss widened and the company will cut 2,100 jobs, amid general shakiness in the telecommunications network industry.
The stock dropped more than 14 percent in morning trading.
The Canadian telecom equipment maker reported a loss of $844 million (euro561 million), or $1.70 per share, compared with a loss of $80 million, or 19 cents per share, a year earlier.
Analysts polled by Thomson Financial predicted earnings of 57 cents per share.
The company said it plans to cut about 2,100 jobs globally as part of its restructuring plan and will move approximately 1,000 additional jobs to areas with higher growth that cost less to run.
The stock fell $1.71, or 14.93 percent, to $9.74, in morning trading on the New York Stock Exchange.
Mike Zafirovski, Nortel's president and CEO, called North America's economy a "challenging environment" and acknowledged his attempt to turnaround Nortel hasn't been easy.
"I've never seen a turnaround where you miraculously fix the business over night," said Zafirovski, a former executive at Motorola and GE who joined the company in 2005.
"We knew what we got into. The economy is not helping per se, but we're playing the cards which we have."
Nortel has just over 30,000 employees now after having almost 100,000 before the tech boom went bust in 2000.
The company took $38 million (euro25.2 million) in charges associated with its restructuring programs in the quarter, compared with $29 million, a year earlier.
Nortel said it recorded a $1.06 billion (euro0.7 billion) charge in the quarter related to changes in its Canadian tax profile.
Revenue for the period ended Dec. 31 fell 4 percent to $3.2 billion (euro2.13 billion) from $3.32 billion in the previous year.
Analysts expected sales of $3.28 billion (euro2.18 billion).
Banc of America Securities analyst Tim Long kept a "Neutral" rating and $20 price target on the Toronto-based company.
"We believe many challenges remain, given the competitive environment, carrier spending trends and the ongoing restructuring efforts," Long said in a client note.
During the fourth quarter, sales and operating income missed consensus estimates, and the carrier networks and global services units fell below Banc of America's estimates, Long said.
Operating margins also fell to 7.6 percent, below Long's estimate of 9.6 percent, he said, noting that margin improvements in the past quarter did not carry over.
"We view this as a sign that the recovery will take longer than we had anticipated," he said.
Nortel reported an annual loss of $957 million (euro636 million), or $1.98 per share, compared with a profit of $28 million, or 6 cents per share, in the prior year.
Full-year sales dipped 4 percent to $10.95 billion (euro7.28 billion) from $11.42 billion a year ago.
Nortel said it expects 2008 revenue growth in the low single digits.


Updated : 2021-04-17 02:52 GMT+08:00