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To: 2MAR$ who wrote (44)	4/26/2000 7:03:00 AM
From: 2MAR$	Read Replies (1) \| Respond to of 762

Nortel Profit Blasts by Estimates, beats est by 5cents By Susan Taylor dailynews.yahoo.com OTTAWA (Reuters) - Nortel Networks Corp. (Toronto:NT.TO - news)(NYSE:NT - news), the world's No. 2 telecoms equipment supplier, said on Tuesday red-hot demand for fiber-optic and Internet gear had blasted its first quarter profit past analysts' estimates and spurred it to raise its forecasts for the year. ``This was a gangbusters quarter for Nortel,'' chief executive John Roth told Reuters. ``We blew the doors off -- 48 percent revenue growth, orders grew faster than that, earnings up 64 percent -- we're just delighted.'' Nortel said operating profit jumped to $347 million, or 23 cents a share, easily topping analysts' estimates of 18 cents a share. In the year-ago period, the company posted a profit of $193 million, or 14 cents a share. Speak your mind Discuss this story with other people. [Start a Conversation] (Requires Yahoo! Messenger) Revenues in the quarter jumped to $6.32 billion from $4.29 billion a year ago. But due to acquisition-related costs and one-time gains and charges, Nortel recorded a net loss of $730 million, or 52 cents a share, in the latest quarter. ``It's just an awesome quarter,'' said John Wilson, analyst at Bunting, Warburg Dillon Read. ``A company that size growing this fast is an awesome thing.'' Shares in Nortel, which fell during recent market punishment meted out to technology issues, surged nearly 9 percent on the Toronto Stock Exchange on Tuesday to close at C$156.40 before the results were released. In New York, the stock added 9 to end trade at 107 1/2. It jumped to 114 3/4 in after-hour trading. Because of booming market demand, Nortel said it now sees revenues growing in the 30-35 percent range this year, up from its previous estimate for a 20-21 percent increase. The company said it expects earnings per share to grow by about 30 percent this year. That estimate is affected by the effects of cutthroat pricing competition for wireless and Internet equipment and dilution from Nortel's last two acquisitions. ``Those two major factors hold our earnings growth at about 30 percent,'' said Nortel chief financial officer Frank Dunn in a conference call on Tuesday with analysts. Gross margins were the lone weak spot in the first-quarter results, at 41 percent versus 43.4 from the fourth quarter, though the company said it expects those margins to rebound to 1999 levels. Nortel said its sales to service providers and telephone carriers, a hotly contested market, were up 64 percent over the same period last year. Enterprise sales, however, were up just 5 percent, though Nortel said new products will help drive sales in the second half of the year. Much of the quarter's strength stemmed from optical equipment revenues, which Roth said were up 150 percent. Nortel, which said it is on target to triple production for fiber-optic gear in July, said the improved capacity will help it meet a $10-billion sales forecast for optical equipment in 2000. The company announced last November a $400-million expansion, adding plants and employees in Canada, Britain and the United States. In February, Nortel added another $260-million expansion to that effort, which will be completed next year. The results come in advance of Nortel's annual meeting at its research and development facility in the Ottawa suburb of Kanata on Thursday, at which shareholders will vote on a stock distribution plan by major shareholder BCE Inc. (Toronto:BCE.TO - news). BCE shareholders will receive 0.78 of a Nortel common share for each BCE share they hold, while Nortel shareholders will receive a one-for-one share exchange. Nortel said the move will increase liquidity and give it greater independence to compete with rivals Murray Hill, N.J.-based Lucent Technologies Inc. (NYSE:LU - news) and San Jose, Ca.-based Cisco Systems Inc. (NasdaqNM:CSCO - news) ($1-$1.47 Canadian) E-mail this story \| Printer-friendly format