George, earnings come out tomorrow morning before the open. Sorry, don't know the confernce call #. Not sure it's open to the public, maybe just a replay???
Nortel to Report Less Sales Detail; Analysis Tougher (Update1)
Bloomberg News
April 26, 1999, 4:24 p.m. PT
Nortel to Report Less Sales Detail; Analysis Tougher (Update1)
(Adds that company will open conference call to reporters in
14th to 17th paragraphs.)
Brampton, Ontario, April 26 (Bloomberg) -- Northern Telecom
Ltd., North America's No. 2 phone-equipment maker, will disclose
fewer details about its quarterly sales, following the reporting
style of rivals Lucent Technologies Inc. and Ericsson AB.
Starting with its first-quarter earnings report tomorrow,
Nortel will eliminate a three-way breakdown of sales to phone
companies, its biggest customers, into types of equipment.
Instead, the company will report its sales in only two main
categories, phone companies and non-phone companies.
Nortel used to give investors a more detailed look at its
phone-company sales, listing them by product line -- traditional
switches, wireless gear, and broadband equipment such as data-
networking switches and fiber optics. The change means that
investors and analysts could have a harder time figuring out
which products are selling well and which ones are lagging.
''You can bury a lot of stuff if you don't break out the
numbers,'' said Martin Hubbes, who manages C$880 million (US$596
million) in Canadian stocks, including Nortel, with AGF
Management Ltd. in Toronto.
In regulatory filings, Nortel said the change in reporting
reflects the ''continued evolution'' of its business. The
company, which once sold its products separately, now blends
different technologies into single networks.
Lucent, the world's No. 1 phone-equipment maker and Nortel's
main rival, has reported its sales using a similar level of
disclosure since it was spun off from AT&T Corp. in 1996. Swedish
phone-equipment maker Ericsson AB also switched to reporting less
detail on sales in the first quarter.
Insight
Nortel, which had 1998 sales of US$17.6 billion, may be
concerned that revealing more details about its business than
competitors puts it at a disadvantage, some analysts said.
Knowing that a certain type of Nortel equipment is selling well
could prompt a rival company to cut its prices, for instance.
''Lucent would like to get an insight into Nortel the same
way Nortel would like to get an insight into Lucent,'' said
Michael Neiberg, an analyst at Hambrecht & Quist Group.
Also, investors could balk if they think sales in fast-
growing areas such as networking equipment are rising too slowly.
Lucent, which agreed in January to buy Ascend Communications Inc.
to gain networking equipment, will face the same kind of
scrutiny.
Eliminating the breakdown lets Nortel, which is 41 percent
owned by BCE Inc., Canada's biggest telecommunications company,
decide exactly which sales details it wants to disclose.
''By choosing their definitions carefully, they probably can
show that they're gaining market share,'' said AGF Management's
Hubbes.
Nortel spokesman Jeff Ferry declined to say whether company
executives will break out sales by subcategory for analysts or
investors.
Forecasts
Analysts expect Nortel's first-quarter profit to rise to 33
cents a share, the average estimate gathered by First Call Corp.
That's up from the year-earlier US$141 million, or 27 cents,
excluding a charge and results from Bay Networks Inc., which it
acquired for US$6.9 billion in August.
The company also will open its quarterly conference call on
earnings to some reporters for the first time, a move that may
help small investors.
Nortel used to limit attendance on the call to analysts and
large shareholders. That put smaller investors at a disadvantage
by preventing them from learning quickly about information
disclosed on the call, such as sales and profit forecasts, which
can affect a company's share price.
That may not be enough to satisfy some shareholders. At a
time when technology stocks like Lucent and Compaq Computer Corp.
have fallen on disappointing sales, the elimination of revenue
subcategories doesn't sit well with many of them.
''It's not positive,'' said Hubbes. ''If we really hate it
enough, we'll vote with our feet and leave.'' |
