Nortel chief cannot call end to accounting crisis
By Ken Warn in Toronto
Published: June 2 2004 14:38 | Last Updated: June 2 2004 18:25
Nortel Networks is still unable to provide revised financial results for 2003 or preliminary figures for the first quarter of this year and cannot say when it will be able to do so, Bill Owens, the troubled telecoms equipment maker's new chief executive, said on Wednesday.
A review of the company's accounts by an independent audit committee would not be completed in the current quarter, Mr Owens added.
The markets were dismayed that the company was unable to signal an end to its accounting crisis nor give any revenue figures for the first quarter. Nortel shares were down nearly 6 per cent at C$5.24 in afternoon trading.
However, Mr Owens said the company had "good business momentum. Our orders are good. Our customers are satisfied". Nortel would perform better than the "low single-digit percentage growth" of the overall telecoms market, he told analysts in a conference call.
The company gave its first two-weekly financial update demanded by the Ontario Securities Commission after it failed to meet its financial reporting deadlines.
The requirement came after Nortel in April fired Frank Dunn, chief executive, and two other executives, and said its accounting problems were deeper than it had feared.
Mr Owens gave a broad-brush but upbeat assessment of the company's prospects after his first month in the job.
"We will get through this accounting restatement and will do so in great shape," he said.
He vowed to push costs down in the face of low-cost competition from Asia, while maintaining Nortel's emphasis on research. Cost cuts would not necessarily involve more job losses, he said.
Mr Owens said Nortel "will be focused on cash and costs". The company needed cash balances in order to "play our part" in the expected consolidation of the industry, he said.
A former senior US naval officer, Mr Owens suggested his personal reputation was very much on the line in resolving Nortel's problems.
"My life has been built on integrity and credibility," he told the Financial Times.
Nortel, which is also out of compliance with the terms of its $3.6bn public debt, had so far not received notice form bondholders that they wished to accelerate repayment, chief financial officer Bill Kerr said.
The company repeated that last year's previously reported profit of $732m would be cut by about half, while net losses from the two prior years would be cut. |
