The following Nortel article was obtained from the Wall Street Journal's Web Site on September 17, 2008. It is a toss up as to whether Nortel or Alcatel Lucent is in better shape.
Howard
Nortel Networks Corp. said it is reviewing the future course of the company as it cut its revenue forecast for the year and projected third-quarter sales well below analysts' estimates, citing "significant pressure" as customers cut back capital expenditures more than expected.
[Mike Zafirovski]
"It is clear that the business environment in which we operate requires additional immediate and decisive actions," said President and Chief Executive Mike Zafirovski. He said the telecommunications-equipment company is "determined" to take further restructuring actions -- including the possible sale of its Metro Ethernet Networks business -- to improve competitiveness, reduce costs and increase profits.
In August, the company said it was on track to meet its targets for the year despite a challenging business environment. Its previous outlook called for revenue growth in the low single digits and gross margin of about 43% for the full year.
Wednesday, the company projected revenue falling 2% to 4% in 2008 and gross margin of about 42%. Nortel also projected third-quarter revenue of about $2.3 billion and margins of about 39%; analysts surveyed by Thomson Reuters were expecting a 2% revenue increase for the year to $11.2 billion and third-quarter sales of $2.66 billion.
Beyond sagging customer demand, Nortel said revenue in the current quarter is being hurt by foreign-exchange impacts and some product-delivery delays to the fourth quarter.
Last month, Nortel reported a sharply wider second-quarter loss on restructuring charges and slower spending by U.S. telecom carriers.
Mr. Zafirovski has been trying to turn around Nortel for three years. In August, he said he was open to combining Nortel's wireless business with that of another company to gain scale necessary to compete in a tight industry.
Earlier this year, Nortel was in talks to combine its wireless business with that of Motorola Inc., which is trying to turn around its cellphone unit. Mr. Zafirovski, a former Motorola executive, said no decision had been made as to whether the company would buy or sell more assets, or seek a joint venture with another company.
Write to Shara Tibken at shara.tibken@dowjones.com |
