Nortel 2Q meets Street

July 19, 2001: 5:52 p.m. ET

Company posts 2Q loss $19.4B, will take unspecified 3Q charge

NEW YORK (CNNfn) - Nortel Networks Corp., a leading supplier of fiber-optic networking equipment, reported Thursday second quarter results that met expectations while posting a huge $19.4 billion loss.

Excluding one-time charges and acquisition costs, Canadian Nortel (NT: up $0.17 to $7.75, Research, Estimates) reported net losses from continuing operations of $1.55 billion, or 48 cents a share compared to $637 million or 21 cents a share for the same time last year.

Revenue dropped 36 percent to $4.6 billion. Earnings tracker First Call had expected a 48 cent a share loss on revenue of $4.5 billion.

Nortel posted a $19.4 billion loss, including intangible assets, write downs and other charges, or $6.08 a share. In June, Nortel said it expected a second quarter loss of $19.2 billion while also announcing it would cut another 10,000 jobs.

"While I am disappointed with our results for the second quarter, we have taken the right steps in this environment to strengthen Nortel Networks leadership position," Nortel CEO and President John Roth said.

On a conference call, Nortel said it would record a third-quarter charge but declined to provide further details. The lackluster environment for phone companies will continue for the foreseeable future and Nortel "does not expect to see meaningful growth in spending until the second half of 2002," Roth said.

Roth declined to provide guidance for the third quarter or full year 2001. "We are not prepared to predict when revenues will be higher," he said on the call.

Nortel has announced plans to lay off more than 30,000 employees and expects its cost-cutting measures to produce $3.5 billion in annual savings. So far, Nortel has cut 23,000 positions and will reduce another 7,000 over the next eight weeks. The fiber optic networking equipment supplier expects to save about $1 billon pre-tax a quarter.

Nortel also obtained another $2 billion in bank credit facilities which, combined with other financing commitments, it said will provide more than $5 billion in available liquidity.

Nortel shares gained more than 2 percent to close at $7.75. In after hours trading on Instinet, shares dropped to $7.70.