Nortel Dn 5% On Rumors Of Ability To
Meet 4Q Forecasts
By BEN DUMMETT
Of DOW JONES NEWSWIRES
TORONTO -- Nortel Networks Corp. (NT) is down 5% Wednesday after
falling nearly 10% Tuesday, as rumors persist that the big Canadian
networking- equipment vendor will have trouble meeting its earnings and
revenue guidance for the fourth quarter, analysts said.
Nortel, Brampton, Ont., has consistently stated that it will generate revenue of
$8.5 billion to $8.8 billion and earnings of 26 cents a diluted share for the
fourth quarter.
And "we stand by the guidance we've given," a Nortel spokesman said
Wednesday.
Rumors of a possible earnings shortfall stem from speculation that RHK Inc.,
a well-known U.S. technology market research firm, was telling investors that
Nortel is aggressively pricing equipment to close sales to carriers, in order to
achieve its guidance for the fourth quarter. If true, such aggressive pricing
could be a sign that Nortel is struggling to achieve its financial forecasts.
However, Robert MacLellan, a director at RHK, categorically denied that his
firm was making such claims. "We are not the source of the rumors,"
MacLellan said. In addition, RHK has no plans in the foreseeable future to
issue a report - either positive or negative - on Nortel, MacLellan said.
The Nortel spokesman, who was aware of the RHK rumors, said he had
contacted RHK and received a similar response.
"It's a ridiculous rumor that we won't substantiate or comment on and neither
will RHK; I would suggest it's just that: a nonsensical rumor," the Nortel
spokesman said. |
