No Lawsuit?
POSTED AT 1:18 PM Tuesday, February 20
Nortel and JDS Uniphase touch
52-week lows
By RICHARD BLOOM
Globe and Mail Update with Reuters
Shares of fibre-optic buddies Nortel Networks Corp. and
JDS Uniphase Corp. tumbled another 10 per cent each
Tuesday, touching 52-week lows, as investors continued to
remain wary about their future growth potential.
Friday, the stocks tanked — along with the entire tech
sector — after Nortel warned that it would fall far below
analysts' expectations for its 2001 financial year.
JDS is a major supplier of fibre-optic components to
Nortel.
By 1 p.m. EST, Nortel's shares were off $3.25 to $29.44
and JDS Uniphase fell $5.85 to $53.15 on the Toronto
Stock Exchange.
Meanwhile, JDS said Tuesday it was not considering a
lawsuit against Nortel in the wake of its surprise warning
last week.
Reports had incorrectly said JDS was meeting with lawyers
to discuss a lawsuit, said JDS chief financial officer
Anthony Muller.
"We're not considering a lawsuit against Nortel," Mr.
Muller said. "Of course we're talking to lawyers, but it's not
easy to sue your largest customer."
Two days before Nortel chopped its profit and revenue
forecasts, it closed a $2.5-billion (U.S.) all-stock deal for a
JDS manufacturing plant in Zurich. The warning sent Nortel
shares into a dive, lopping about one-third off the stock
value and trimming close to $1-billion from the plant's
purchase price.
Nortel also represents at least 10 per cent of revenues for
JDS's components and modules, which boost the speed
and capacity of fibre-optic networks. Nortel is the world's
No. 1 supplier of fibre-optic systems equipment.
Last week, Mr. Muller said he could "certainly understand"
why some analysts were cutting forecasts below the
company's guidance following Nortel's warning.
JDS said that Nortel's warning came as a "shock" and it is
talking to lawyers to assess the situation.
"It did not come out in the due diligence nor in any of the
representations that were made in the contracts," Mr.
Muller said of the plant sale discussions. "Nortel is saying
they just learned about it."
Mr. Muller would not discuss what options JDS would
consider, adding the company had not decided on any
course of action. |
