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Technology Stocks : Nortel Networks (NT)
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To: Cooters who wrote (14264)11/13/2004 12:18:26 PM
From: Qualified Opinion   of 14638
 
I expect the possibility of additional restatement involves the SEC's views on accounting for embedded software in Nortel's optical products. The status update reads like Nortel and its external auditors believe their historical accounting treatment on optical products is appropriate but they want the SEC's views.

Excerpt from last status update:

Accounting for Embedded Software

The Company and its external auditors are discussing certain other accounting matters with the United States Securities and Exchange Commission (the "SEC"). In particular, Nortel has sought the views of the SEC with respect to the Company's historical and continuing accounting treatment under United States generally accepted accounting principles of revenues recognized on sales of certain optical products containing embedded software. The Company believes that its historical accounting treatment of these optical products is appropriate and is fully supported in this conclusion by its external auditors. Nevertheless, due to the judgments involved in the applicable accounting analysis and the significant impact a different conclusion would have on the Company's reported revenues (namely, the deferred recognition of substantial revenue over a number of subsequent years), the Company, in consultation with its external auditors, decided to obtain the views of the SEC on the Company's analysis and conclusions. The Company's discussions with the SEC on this matter are ongoing. The Company is also discussing certain other matters with the SEC that could affect its and NNL's upcoming filings, including the SEC's open comments on past filings.
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