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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (84636)	10/24/2000 11:36:08 PM
From: S100	Read Replies (2) \| Respond to of 152472

Nortel shares tumble on 'disappointing' revenues By Ken Warn in Toronto Published: October 25 2000 01:04GMT \| Last Updated: October 25 2000 01:17GMT Note - This sounds like a pretty good performance by Nortel, just too much telecom debt :-) Let's not panic just yet. Shares in Nortel Networks tumbled in after-hours trading in New York on Tuesday night even though the Canadian networking equipment maker unveiled third quarter results slightly ahead of analysts' estimates. It also issued a bullish forecast for next year, saying it expected revenues and earnings per share growth of 30-35 per cent in 2001. Net operating earnings for the latest quarter rose 64 per cent from the same period last year to $574m, or 18 cents a share, against a consensus forecast of 17 cents. Revenues for the quarter were 42 per cent ahead at $7.31bn. However, some analysts expressed disappointment that revenues came in below the consensus forecast of $7.6bn. Nortel's shares were off almost 20 per cent at just over $50 after the bell. Including acquisition costs and other non-operating items, Nortel reported a net loss of $586m for the quarter, against a $79m loss in the same period last year. "These look like pretty good numbers, but in markets as demanding as these, are they good enough?" said one analyst. John Roth, Nortel chief executive, shrugged off the after-hours sell-off. "This is trading in pretty thin volumes. Let's see what happens tomorrow (Wednesday)." Nortel is widely credited with positioning itself to meet surging demand for high-speed data networks based on fibre-optic technology ahead of rivals such as Lucent Technologies of the US. However, investor fears have grown over international telecoms companies' capacity to spend on new equipment given their high levels of indebtedness and slowing global growth, adding to market volatility. Despite the initial market reaction, the results contrast starkly with Lucent's troubles. On Monday Lucent replaced chief executive Richard McGinn and released its fourth warning on the company's prospects so far this year. Nortel refused to comment directly on Lucent's problems. However, Nortel saw a huge change coming in the industry three years ago, according to Mr Roth. "The bet we made was that the internet would change everything. I guess there is a price to be paid for coming second," he said. Growth in the third quarter reflected Nortel's continued strength and leadership in the key growth areas of optical internet, wireless internet, local internet and eBusiness solutions, according to Mr Roth. Demand for optical communications equipment again led growth for the quarter, he added, with revenues up nearly 90 per cent from a year ago. For the current year, the company forecast that percentage revenue growth would be in the low 40s, in line with existing forecasts, while optical internet equipment sales would exceed $10bn. It lifted this year's forecast percentage growth in earnings per share from "the high 30s" to "the low 40s". Mr Roth forecast a 20 per cent growth in the overall equipment market next year, with Nortel increasing its market share. The company was not facing any problems on vendor financing, or loans to customers, due to strict Canadian regulations on the issue, said Mr Roth. Vendor financing has been a growing concern in the industry with worries that some telecoms companies cold face problems repaying loans. "We are quite conservative at this end of the business and have to lay off most of the risk," he said. news.ft.com