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To: Johnny Canuck who wrote (36460)	3/16/2002 1:42:25 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68030

Nortel shares could fall by 40%, UBS Warburg says; U.K. job cut reported Friday March 15 10:49 AM EST TORONTO (CP) - Brokerage firm UBS Warburg is warning that Nortel Networks stock could fall as much as 40 per cent from its current level as the slowdown in telecommunications equipment continues. UBS Warburg also cut its revenue and earnings estimates for the Brampton, Ont.-based company. While it cut its 2002 price target for Nortel shares to $6.25 US from $7.50, the brokerage warned Friday that "downside risk can be as low as $3 US in the extreme case." Nortel shares traded in New York at $5.01 US Friday morning, down 20 cents. "We see no compelling fundamental catalyst to propel the shares from these levels," UBS Warburg said. Nortel shares (TSE:NT - news) were off 26 cents at $7.94 on the Toronto stock market - down $1.53 since last week. "We recommend that investors stay on the sidelines," Friday's brokerage advisory said. "Additional risks include: further debt downgrade and potential unspecified cash payments to contract manufacturers." Earlier this week, Moody's Investors Service downgraded Nortel's debt to one notch above junk status, and kept it under review for another possible downgrade. "We point out that our valuation is based on a modest recovery in the second half of 2002 and 2003," UBS said, adding that any recovery in the telecom equipment industry is hard to predict. Another report Friday said Nortel is cutting 350 jobs in its primary research facility in Britain and may cut more deeply within months. A company memo obtained by The Globe and Mail cited "a further decline in business conditions within the U.K. - customers filing for Chapter 11 (bankruptcy protection in the United States), or customers not wanting to spend money at the current time." The document says the company is chopping in 13 areas at the massive Maidenhead facility outside London, and indicates other Nortel operations will also be affected. Staff reductions in Nortel's optical components division will affect operations in Ottawa, the document states, although it doesn't specify whether this is included in previously announced cuts totalling 46,500 jobs - about half the company's workforce. Rumours have been circulating in Ottawa and Raleigh, N.C., that more cuts are on the way in those centres, each representing a major pool of Nortel employees, the Globe and Mail said. Canada's largest technology company is under pressure to show a profit, after a 2001 loss of $27.3 billion US. Frank Dunn, Nortel's chief executive officer, told analysts last week that further "major restructuring" wouldn't be necessary, although he left room for less dramatic cuts.