Nortel 4Q Loss Widens, Cuts Work Force
(AP Online Via Thomson Dialog NewsEdge) TORONTO_Nortel Networks Corp. said Wednesday it will cut 2,100 jobs as it reported fourth-quarter losses had widened, sending shares tumbling 14 percent in morning trading.
The Canadian telecommunications equipment maker reported a loss of $844 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, though such estimates typically exclude one-time charges, like those recorded by Nortel as it restructures.
The company took $38 million in charges associated with its restructuring programs, compared with $29 million, a year earlier. It recorded a $1.06 billion charge related to changes in its Canadian tax profile.
The company said it plans to cut about 2,100 jobs globally and will shift approximately 1,000 additional jobs to lower-cost areas.
Mike Zafirovski, Nortel's president and CEO, called North America's economy a "challenging environment" and acknowledged attempts to turn Nortel around 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 bust in 2000.
Revenue for the period ended Dec. 31 fell 4 percent to $3.2 billion from $3.32 billion in the previous year.
Analysts expected sales of $3.28 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.
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," Long said.
Nortel reported an annual loss of $957 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 from $11.42 billion a year ago.
Nortel said it expects 2008 revenue growth in the low single digits.
Shares fell $1.62, or 14percent, to $9.83, in morning trading.
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