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News > Technology
Nortel affirms guidance
December 14, 2000: 10:52 a.m. ET

Company says it's on track in earnings and revenue, quells investor fears
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NEW YORK (CNNfn) - In an effort to soothe jittery investors, Nortel Networks Corp. Thursday said it remains very confident about its expected earnings and revenue performance for the current quarter and for future results.

Positive remarks from Nortel helped boost its stock performance in early Thursday trading, and shares of Nortel gained $2.50, or nearly 7 percent, to $38.94.

graphicConcerns over Nortel's growth prospects have stripped 15 percent from the value of the stock since Monday's market close. Shares lost C$3.70 to close at C$55.55 on the Toronto Stock Exchange on Wednesday and shed $2.94 to end at $36.44 on the New York Stock Exchange. There had been speculation in the market that Nortel will issue a warning, or pre-announce, that its sales or earnings will not meet forecasts.

The company's affirmation comes a day after Nortel's (NT: Research, Estimates) stock sank 6 percent on concerns that it was scrambling to close sales so it could meet its fourth-quarter revenue and profit forecasts. The Wednesday decline was the second straight day the stock traded lower, fueled by rumors that the world's No. 1 supplier of fiber-optic telecommunications network equipment was racing to close deals before the quarter ends on Dec. 31.

John Roth, president and chief executive of Nortel, said in a statement that he expects the percentage growth in revenue and earnings per share from operations in 2000 over 1999 will be "in the low 40s." He also said that revenue and earnings per share from operations in the fourth quarter of 2000 will be in the range of $8.5 billion to $8.8 billion, and 26 cents per share on a diluted basis.

"Overall, we expect continued strong growth in optical Internet, wireless Internet, local Internet and eBusiness solutions. We continue to expect our Optical Internet revenues to grow in excess of 125 percent in 2000 over 1999, to exceed $10 billion," Roth said.

For fiscal 2001, Roth said he continues to expect the overall market to grow more than 20 percent and that he sees Nortel growing "significantly faster" than the market. Roth anticipates growth in revenue and earnings per share from operations in the 30 to 35 percent range.

Nortel's outlook for the first quarter of 2001 is revenue and earnings per share from operations to range between $8.1 billion to $8.3 billion, and 16 cents per share on a diluted basis.

The Brampton, Ontario-based company first announced the same expectations in late November, on the heels of its third quarter results, which disappointed many investors who had expected higher revenues.

The revenue shortfall sparked a stock sell-off in Nortel's and other optical networking companies, including Cisco (CSCO: Research, Estimates), JDS Uniphase, (JDSU: Research, Estimates) and SDL Inc. (SDLI: Research, Estimates).

-- Reuters contributed to this report graphic

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.