Wednesday November 5 12:43 PM EST
Nortel plays down impact of Asian turmoil
ZURICH, Nov 5 (Reuters) - Northern Telecom Ltd (NTL.TO) played down the potential impact of Asian
economic turmoil on its business and forecast on Wednesday that profits would grow faster than revenue,
which it sees swelling at double-digit rates.
''In terms of cancellations (there is) nothing material that I am aware of,'' Wes Scott, finance chief for the
Canadian telecoms equipment group, told financial analysts when asked about the likely fallout from Asia's
financial uproar.
''I think a lot of the issues that we are looking at now will be the pace of build for the customers we have.
It might be more a question of delivery, but we haven't seen that,'' he added.
Southeast Asia contributes less than five percent of group revenue, he said, and most of the contracts
with customers there are denominated in U.S. dollars.
All of Asia including Japan makes up around half of the 13 percent of group revenue from outside North
America and Europe.
''Our biggest concern on foreign exchange is really the impact on the underlying economy and what that
will do,'' he said. Very little of the business that Nortel finances for customers in Southeast Asia sits on its
balance sheet, he added.
He presented 1998 targets that showed revenue should grow in the ''mid-teens'' percentage range, gross
margins of around 40 percent, return on assets of 18 to 22 percent and a customer satisfaction rating of
87 percent or higher.
He declined to make a specific forecast for profit growth, but said it would be ''certainly faster than
revenue.'' Nortel earned U.S. $619 million in 1996 on revenue of $12.8 billion.
It saw the overall market expanding by 14 percent a year to around $295 billion in the year 2000.
Scott said Nortel was looking at around 30 potential acquisitions or divestitures, but said no large
take-overs were in the pipeline. ''We don't have any on the books at this stage,'' he said. |
