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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Devin123 who wrote (26382)	6/7/2001 12:06:11 AM
From: Devin123	Read Replies (1) \| Respond to of 37746

S&P Lowers Outlook on Nortel Networks Due to Speculation It May Unload Assets By MARK HEINZL Staff Reporter of THE WALL STREET JOURNAL BRAMPTON, Ontario -- Standard & Poor's cut its outlook on Nortel Networks Corp. to "negative" from "stable," amid industry speculation that the telecommunications gear maker is considering asset sales to raise cash. The big ratings agency warned the downturn in telecom spending could lead to a rating downgrade for Nortel. Separately, UBS Warburg analyst Mike Urlocker said he believes Nortel might be preparing to sell its Clarify customer-relations management unit, and cites Oracle Corp. and Amdocs Ltd. as possible buyers. Representatives of Oracle and Amdocs didn't return phone calls. Nortel Chief Executive John Roth said in an interview this week the company has been approached by "a couple people" about selling Clarify, but he declined to elaborate. Mr. Roth did say Nortel is seeking to refocus on its core operations in optical and wireless networks. Nortel recently shut down its Promatory digital-subscriber-line business, which made gear to enable high-speed Internet access. Nortel paid $2.1 billion in stock to acquire Clarify last year, but a sale in the current depressed markets would fetch well below that amount, UBS Warburg's Mr. Urlocker speculated. At 4 p.m. Wednesday in New York Stock Exchange composite trading, Nortel fell 57 cents to $13.13, well off the 52-week high of $89. Standard & Poor's maintained its single-A rating for Nortel's long-term debt, but said weakened demand for telecom gear is "more severe than expected, resulting in slower overall market growth and demand for Nortel's products." The rating agency said it expects Nortel's revenue to drop by about 15% from last year's level of $30.3 billion and that Nortel will return to a "break-even" level in terms of earnings before interest, taxes, depreciation and amortization in the second half of this year. "Should revenue decline significantly below these levels or should other financial metrics erode substantially, ratings could be lowered," Standard & Poor's said. The move by Standard & Poor's follows a recent downgrade of Nortel's debt rating by Toronto-based rating agency Dominion Bond Rating Service. Dominion Bond cited "a dramatic downturn in several of the company's core markets that has caused a sharp reduction in Dominion Bond's outlook for Nortel's sales growth and margins for 2001 and 2002." Nortel reported a loss of $2.58 billion in its first quarter, and is cutting 20,000 jobs, more than a fifth of its work force, in order to slash costs and conserve cash.