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To: Johnny Canuck who wrote (39590)	5/28/2003 3:54:25 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69885

Nortel's Dunn still sees bumps in the road By Ottawa Business Journal Staff Wed, May 28, 2003 10:00 AM EST Frank Dunn at Nortel's AGM in April Nortel Networks' chief executive Frank Dunn spoke Wednesday of stability in the industry and the company's efforts to restore its leadership position, but declined to offer any guidance for the current quarter. In a presentation to analysts and investors, Dunn said the telecom industry has become "much more stable." "We're looking for much a better 2003, but I will tell you, (there will) still be a number of speed bumps in the way," he said. Nortel is banking on the growing use of mobile phones and the Internet and the realization among telecom service providers that they must upgrade to higher speed networks to deliver the services that customers want. "There's an alignment in the industry about what has to be done — people know that it's all about packet, it's all about broadband," he said. Nortel's greatest growth opportunities lie in wireless data and in voice-over-packet technology that uses Internet-based networks to carry telephone calls, he said. "The last 18 months haven't been fun," he said. "Aside from a bit of an eye problem I'm having fun now; Nortel is having fun now." Dunn is recovering from surgery to repair a detached retina. The procedure forced Wednesday's presentation to be postponed from May 7. CFO Doug Beatty said the company's restructuring, characterized by thousands of job cuts and facility closures, is effectively complete. "We feel that what we put in place and what we have is appropriate," Beatty said. "We're looking at a break-even level that's below $2.4 billion of revenue per quarter. We will however remain flexible and adaptable to whatever market conditions we have." A month ago Nortel posted an unexpected net profit for its first quarter thanks to one-time gains. The Brampton, Ont.-based company posted a profit of $54 million, or a penny a share, compared with a loss of $841 million, or 26 cents a share, in the same period a year ago. On an operating basis the company posted an expected net operating loss of $136 million, or three cents a share. Revenues continued to fall, to $2.4 billion from $2.91 billion, but were still higher than estimates. For almost a year Nortel had been forecasting a return to profitability on an operating basis by the second quarter ended in June. In announcing the first quarter results, the company pulled back from that guidance and said it will not provide specific forecasts. "Given the ongoing economic and geopolitical uncertainty, customers continue to spend cautiously," the first quarter report read. "As a result, the company currently expects the capital spending levels in the second quarter of 2003 to be similar to the first quarter of 2003. The company is not providing any specific revenue or earnings guidance at this time." [Harry: I have to admit I had a bit of a problem with management paying out profitability bonuses last Q. Profitability was achieved through a one time gain of an operation they sold as opposed to an on going run time profitabilitiy.]