Nortel Networks Sees First Quarter Below Expectations
Tuesday March 27, 4:43 pm Eastern Time
Press Release
Nortel Networks Sees First Quarter Below Expectations
TORONTO--(BUSINESS WIRE)--March 27, 2001--Nortel Networks Corporation(a) (NYSE:NT - news; TSE:NT. - news) today announced that its results for the first quarter of 2001 are anticipated to be below the Company's previously stated expectations.
Nortel Networks now expects revenues in the range of US$6.1 billion to US$6.2 billion and a loss per share from operations (b) in the range of US$0.10 to US$0.12 for the quarter. This is below the Company's previous estimates of US$6.3 billion of revenue and loss per share from operations(b) of US$0.04 provided on February 15, 2001.
``We continue to feel the impact of the economic downturn in the United States and are now seeing customers globally assess its effect on their businesses,'' said John Roth, president and chief executive officer, Nortel Networks. ``Reduced and/or deferred capital spending and increased pricing pressure are resulting in lower overall revenues, particularly in the United States.''
Nortel Networks has made significant reductions in its employee base and adjusted its supply chain to reflect the current economic environment. The Company has substantially completed the employee related actions announced on February 15, 2001. The full benefit of these reductions is expected to impact the second quarter of 2001. However, due to the market environment, the Company is planning further reductions and now expects an aggregate net reduction, by mid year 2001, of approximately 15,000 from the number of employees at December 31, 2000. Nortel Networks expects to tightly adhere to its cost reduction and business realignment initiatives while driving further improvements in productivity and efficiency despite a difficult economic environment.
``Given the poor visibility into the duration and breadth of the economic downturn and its impact on the overall market growth in 2001, it is not possible to provide meaningful guidance for the Company's financial performance for the full year 2001,'' Roth said.
``We continue to align our cost structure and industry leading product portfolio with our customers priorities and plans,'' Roth said. ``It is our belief that Nortel Networks continues to be the best positioned high-performance Internet and communications equipment vendor for the customers we serve, and that our global leadership position combined with our agility will enable us to weather the current economic storm and come out of it a stronger company.''
Nortel Networks is a global Internet and communications leader with capabilities spanning Optical, Wireless, Local, Personal Internet and eBusiness. The Company had 2000 U.S. GAAP revenues of US$30.3 billion and serves carrier, service provider and enterprise customers globally. Today, Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet, promising a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com.
Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price and product competition; the dependence on new product development; the impact of rapid technological and market change; the ability of Nortel Networks to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of consolidations in the telecommunications industry, the uncertainties of the Internet; stock market volatility; the ability of Nortel Networks to recruit and retain qualified employees; the ability to obtain timely, adequate and reasonably priced component parts for suppliers and material manufacturing capacity; the impact of increased provision of customer financing by Nortel Networks; the impact of the credit risks of our customers; the entrance by Nortel Networks into an increased number of supply, turnkey, and outsourcing contracts which contain delivery, installation, and performance provisions, which, if not met, could result in Nortel Networks having to pay substantial penalties or liquidated damages; and the impact of increased provision of customer financing and commitments by Nortel Networks. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Nortel Networks disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
(a) On May 1, 2000, Nortel Networks Corporation acquired all of the
outstanding common shares of Nortel Networks Limited (formerly
called Nortel Networks Corporation) by way of a Canadian
court-approved plan of arrangement. Nortel Networks Limited has
preferred shares outstanding which are publicly traded. Nortel
Networks Limited's financial results have been consolidated into
the results reported for Nortel Networks Corporation. Holders of
Nortel Networks Limited preferred shares will receive separate
financial disclosure from Nortel Networks Limited in accordance
with the requirements of applicable law.
(b) Net earnings (loss) from operations applicable to common shares is
defined as reported net earnings (loss) applicable to common
shares before ``Acquisition Related Costs'' (in-process research and
development expense, and the amortization of acquired technology
and goodwill all acquisitions subsequent to July, 1998), stock
option compensation from acquisitions and divestitures, and
one-time gains and charges.
Nortel Networks, the Nortel Networks logo and the Globemark are trademarks of Nortel Networks.
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Contact:
Nortel Networks
Business Media:
David Chamberlin, 972/685-4648
ddchamb@nortelnetworks.com
or
Tina Warren, 905/863-4702
tinawarr@nortelnetworks.com
or
Investor Relations:
Nortel Networks, 888/901-7286 or 905/863-6049
investor@nortelnetworks.com
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