Related optical networking news: biz.yahoo.com
Canada's Nortel rally tied to expansion report
OTTAWA, Nov 1 (Reuters) - Nortel Networks Corp. (Toronto:NT.TO - news) (NYSE:NT -
news) staged a strong rally on Monday afternoon following a news report the
telecommunications equipment developer is expanding its red-hot fiber-optics unit to meet
soaring demand.
According to a report in the Wall St. Journal, Brampton, Ontario-based Nortel said it could
spend up to $400 million to expand its Montreal, Quebec facility. That manufacturing division
supplies optical network technology for all of North America and some offshore customers.
Nortel would not comment on the story, but said the firm will hold a press conference on Tuesday in Ottawa, the firm's research
and development headquarters. ''We will be making an announcement tomorrow,'' said spokeswoman Shelley Grandy.
Nortel shares surged in afternoon trade, gaining C$3.55 on the Toronto Stock Exchange to trade at C$94.10 while it added $2-2/16
on the New York Stock Exchange to $64-1/16.
Michael Urlocker, analyst at Scotia Capital Markets in Toronto, said that if the report is true, the company is on track to solving its
supply dilemma. ''What it means is Nortel is responding quickly to very high demand it sees in optical products.''
Nortel can't keep up with growing sales of fiber-optic gear, one of the fastest growing segments of the telecommunications
equipment industry.
In its third-quarter earnings issued on October 26, the company bettered consensus expectations with its 28 cents per share profit,
largely on the strength of optical sales. The business recorded 100 percent year-over-year growth.
''We're absolutely sold out in our optical (products) this quarter,'' Nortel Chief Executive John Roth told Reuters at the time.
($1=$1.47 Canadian) |
