|
Nortel warns, cuts jobs
|
 |
October 2, 2001: 6:31 p.m. ET
Revenue shortfall of $500 million seen; up to 19,000 more jobs may be at stake
|
NEW YORK (CNNfn) - Nortel Networks warned Tuesday it will post a wider-than-expected third-quarter loss, and said it is cutting at least 15,000 more positions from its work force.
Nortel (NT: Research, Estimates) said it expects to report a quarterly loss of $910 million excluding charges, or 28 cents per share.
|
|
VIDEO
|
|
 Frank Dunn, CFO of Nortel Networks, chats with CNNfn about third-quarter loss and job cuts. |
|
Real
|
28K
|
80K
|
|
Windows Media
|
28K
|
80K
|
|
Analysts surveyed by First Call currently expect a loss of 21 cents per share.
Including charges, Nortel is expecting to log a net loss of $3.6 billion, or $1.13 per share.
Charges for the quarter include $1.3 billion in incremental charges, which includes charges for excess and obsolete inventory and third-party investments, and $735 million in restructuring charges.
The company is also taking a $650 million charge for ongoing amortization on intangible assets.
"People had expected everyone to miss the quarter so it's not surprising that they missed," said Christin Armacost at SG Cowan. "Market conditions are especially challenging for some of these companies, and they are now getting down to a point where they can drive a profitable business model."
The company said it expects third-quarter revenue from continuing operations to be $3.5 billion, compared to the consensus First Call estimate of $3.98 billion.
Nortel said it is continuing to cut jobs, bringing its number of employees down to about 45,000 from 94,000 at the beginning of the year. This would translate into further cuts of 15,000-to-19,000, including the 30,000 cuts previously announced.
Nortel also said it is reworking its current breakeven plan to reflect expected revenue.
"In light of the current levels of expected industry spending, we are adjusting our work plan and targeting a cost structure, expected to be in place during the first quarter of 2002, to drive breakeven at a quarterly revenue level well below $4 billion, instead of the $5 billion quarterly revenue level outlined previously," said John Roth, president and CEO, in a statement.
Roth told a conference call on Tuesday that there are signs its customers are starting to approach "sustainable level of spending."
Roth, who announced his plans to step down as CEO in April, will be replaced by current CFO Frank A. Dunn, the company said Tuesday. Roth will remain at the company as vice chairman.
Shares of Nortel fell 28 cents to $5.01 in after-hours trading. 
-- from staff and wire reports
|
|
|
|
|
|
Nortel Networks
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
