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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (11084)	7/16/2001 8:25:42 AM
From: Frank Pembleton	Respond to of 14638

Street prepared for Nortel Networks to report record loss this week TORONTO (CP) -- Investors looking for good news from Nortel Networks (Quote\|Profile), which is expected to report a $19.2-billion-US quarterly loss this week, might well be looking at a mirage in the high-tech wilderness. Analysts wouldn't be surprised if the fibre-optic giant threw in more job cuts on top of the 30,000 announced already for this year, and maybe a plant closure or two to deal with the "abrupt" slowdown in its sector. "The way that company has been going for the last decade, no one can ever say the cutting is over," said Lawrence Surtees, senior telecom analyst with research firm IDC Canada. "Even when times are good, they're looking at different portfolios, different (product) mixes." Brampton, Ont.-based Nortel telegraphed a bad second quarter when it released a preliminary report last month ahead of Thursday's announcement. A loss of $19.2 billion US would be by far the biggest in Canadian history. The company's plight deepened last week with the sudden departure of Anil Khatod after less than three months as chief strategy and marketing officer. Khatod -- the latest in a series of high-level executives to leave the company -- had been seen as a possible successor to chief executive officer John Roth when Roth retires next spring. For Thursday's quarterly report, "the best-case scenario is that there isn't any big sudden surprise," Surtees said. However, there has been plenty more bad news from the telecom sector since Nortel's warning last month. Britain's Marconi PLC announced 4,000 additional job cuts on July 4, and Motorola said Thursday it would also cut 4,000 more jobs. Vancouver-based 360networks, a major purchaser of telecom equipment, has filed for bankruptcy protection. That has left some analysts speculating that more cuts may be coming at Nortel. "The telecom slowdown, broadly speaking, has not only radiated out to virtually all sectors of the industry but to all four corners of the globe, and when we can see a concerted turn, I think, is highly problematic," said Ross Healy, president of Strategic Analysis Corp. in Toronto. "The Street is not looking for any further surprises," said Duncan Stewart, portfolio manager with Tera Capital Corp., although it's "anybody's guess" when there might be a turnaround in the industry. Stewart added that it's possible Nortel will announce a few more job cuts -- even though it has said it is done for now -- as the company continues to get its costs in line with the decline in its revenues. Nortel confirmed last week that it is looking for a buyer for its CVX operation, a profitable business that can be traced back to a $305-million US acquisition of Aptis Communications Inc. of Chelmsford, Mass. Nortel shares closed at $13.20 on Friday, up 54 cents for the day but only about one-tenth their 52-week high of $124.50. The slowdown in the sector was caused by "massive overbuilding and stunning overcapacity," Healy said. "And that's not going to be worked out in six months." Right now, no one can determine if Nortel has cut far enough to return to profitability, since the picture keeps changing, Healy said. To show it's done enough, Nortel needs to emphasize to investors that it is focused on profitability and on its best product lines, he said. A big challenge for the company now is "to convince the world that they're a strong and growing concern," Surtees said. "They need to convince people that they're still getting important contracts, that they're still in a strategic position in a couple of core businesses."