Nortel Announces Grim Q4 Expectations
By Dan McDonough, Jr., Wireless.NewsFactor.com
One of the most bruised companies to struggle through the weak economy of 2001, Nortel Networks (NYSE: NT - news) has offered expectations for the final quarter of the year that are not likely to cheer investors.
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For the quarter ending December 31st, Nortel expects to report revenue of US$3.4 billion. That compares to revenue of $8.8 billion in the fourth quarter of 2000, and revenue of $3.7 billion in the third quarter of this year.
Including more than a billion dollars in one-time acquisition costs and other charges, Nortel said its per-share loss will weigh in at about 63 cents. The good news Nortel has to offer is that its downsizing and restructuring is moving along, as the company plans to have about 52,000 employees at the end of the year -- representing more than 30,000 job cuts this year.
Looking for Break-Even
Once it is done with its efforts to restructure the business, Nortel said it will have about 48,000 employees. Originally, Nortel expected to whittle its staffing levels to 45,000 -- but that plan has changed.
Nevertheless, Nortel said this adjustment to its restructuring will not impact its cost structure. Even with quarterly revenues of well below $4 billion, the company believes it can break even under its new cost structure -- still keeping the extra 3,000 employees.
Nortel expects to have its restructuring wrapped up in the first quarter, after it takes care of notification and consultation processes with its affected employees. It also is in the process of revamping its customer support strategy.
Better Credit Line
Another bit of good news for Nortel was that it was able to amend its $2 billion 364-day credit agreements set up in June. Now, the term has been extended from June 14, 2002, to December 13, 2002. The banks involved also agreed to trim the size of the committed credit to $1.58 billion. Nortel chief financial officer Terry Hungle believes this puts the company in a good position for 2002.
"At the reduced level, we believe that the amount of this facility is appropriate for Nortel Networks in light of the progress that we have made on our work plan, the results of our ongoing focus on cash management and our current cash position," Hungle said.
It is only a matter of time until investors find out if the plan is working. Nortel said it will report its fourth-quarter and full-year financial results on January 17th. At that time, it also plans to give some guidance on what it expects in the first quarter of 2002. |
