Nortel is in deep doo-doo...but I wouldn't mind buying shares at $4-$5's...
Nortel Talks Tourniquet as Red Ink Flows
By Scott Moritz
07/19/2001 18:05
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Nortel NT Thursday posted a steep second-quarter loss on a sharp revenue decline, but said it has slowed its cash burn rate.
The maker of phone network gear lost 48 cents a share for its second quarter on revenue of $4.61 billion. The revenue figure slightly exceeded Wall Streets deeply diminished expectations. Including a $12.3 billion writedown of acquisition-related goodwill, Nortel lost whopping $19.4 billion, or $6.08 per share.
Nortel said 23,000 workers have been fired so far this year and that it will fire 7,000 more this quarter. Nortel, which earlier this year employed 96,000 people before laying out plans to cut 30,000 jobs in two stages, said the layoffs will help trim $1 billion a quarter in costs by the end of this year.
Like rivals Lucent LU and Cisco CSCO , Nortel has been trimming staff and operations in an attempt to bring costs more in line with dramatically falling sales. With phone and Internet companies scrimping on equipment purchases in order to better manage their own revenue downturns and increased debt service commitments, networking gearmakers have been hammered by daunting shortfalls in sales.
Nortel said Thurday that it managed in the latest quarter to slow its cash burn and stabilize its funding situation. Nortel said that considering its cash, bank lines and other financing agreements, it has $5 billion in available cash.
Investors and analysts had increasingly questioned whether Nortel could satisfy its funding needs at a time when profitability was possibly one or even two years away.
Citing continued poor conditions, the company did not provide a financial outlook. Nortel CEO John Roth said in a statement that sustained growth was at least a year away.
"We do not expect meaningful growth in spending to occur before the second half of 2002," said Roth in a press release. "As a result, our visibility continues to be limited for the near term and we will not provide guidance for the third quarter or full year 2001 at this time.''
Nortel shares fell 25 cents, to $7.50, in after-hours trading on Island after rising 17 cents during the regular session. |
