Nortel losses widen on write-downs, falling revenue
Losses continue to widen on write-downs and slumping revenue at telecom giant Nortel, which has applied for bankruptcy protection in the United States, Canada and Europe (story here ).
The company posted a fourth-quarter net loss of $2.13 billion, or $4.28 per diluted share, compared with last year’s net loss of $844 million, or $1.70 per share. Earnings were hit by $2.19 billion in non-cash charges related to reduced goodwill and deferred tax assets.
Revenues in the fourth quarter of 2008 decreased 15 percent to $2.72 billion, as compared with the same quarter of 2007. Full-year revenues decreased by 5 percent from 2007 to $10.42 billion.
The company trimmed operating expenses by 30 percent from the prior year, and down 10 percent sequentially, in response to the current economic crisis.
The bankrupt telecom equipment company announced last week that it plans to cut its workforce by 3,200 jobs worldwide over the next several months (story here ). And in addition to filing for creditor protection, in January the company also announced that it would exit the mobile WiMAX business, ending a venture it had with Alvarion (story here ).
As part of a strategy for moving forward, Nortel announced the appointment of Pavi Binning as chief restructuring officer of the company and Nortel Networks Limited (NNL), a position he will hold in addition to his existing duties as CFO.
Beginning with the first quarter of 2009, Nortel said it will report financial results under a new operating model with four business units: Carrier Networks, Enterprise Solutions, Metro Ethernet and the LG-Nortel joint venture. Each of the segments will include the associated financial results formerly reported in the Global Services group.
If there was an upside for Nortel, it would be in the company’s response to the current crisis. Operating expenses in the fourth quarter were down.
"The management operating margin was the highest since 2000, key customer performance and quality metrics were also at multi-year highs, and our fourth-quarter operating expenses were down 30 percent from the prior year," said Nortel President and CEO Mike Zafirovski.