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

To: pcyhuang who wrote (13749)	3/15/2004 2:24:18 PM
From: The Ox	Read Replies (1) \| Respond to of 14638

Down 15% at the moment... 03-15-04 0935ET =DJ Nortel Networks Down 9% After CFO Put On Paid Leave By Ben Dummett Of DOW JONES NEWSWIRES TORONTO (Dow Jones)--Nortel Networks Corp. (NT) is significant lower Monday after its latest accounting bombshell gives investors more reason to question management's credibility. As reported, Nortel, the Canadian equipment vendor, put its chief financial officer Douglas Beatty, and controller Michael Gollogly on paid leave pending completion of the independent review of Nortel's financial statements by the company's audit committee. In their places, Nortel has named William Kerr as interim chief financial officer and MaryAnne Pahapill as interim controller. The executive suspensions come after Nortel last week said it would likely restate resutls for 2003 and one or more earlier periods as a result of the audit committee's review of certain accruals and provisions recorded in past financial statements. Last fall, Nortel restated results for 2000 through 2002 and the first half of 2003. Nortel spokeswoman Tina Warren said the decision to place Beatty and Gollogly on paid leave was made subsequent to the company's annoucement last week of the possiblity of further restatements. She declined to make Beatty available for comment or to provide specific reasons why he and the controller were being put on leave now rather than at the time the first restatements were announced. Nortel was critcized by some last week for not providing more details about the potential materiality of any future restatements, and the lack of information in the latest release doesn't help the situation. That said, some analysts suggested last week that any future restatements wouldn't likely be material, but Monday's announcement puts that view in question, said Paul Holman, an analyst at Domininion Bond Rating Service. "The news release this morning would suggest that perhaps there is something more material going on here," Holman said. He said "not having more information is (the most) disconcerting" issue. Last week, DBRS placed Nortel's debt on review with negative implications, and that hasn't changed, Holman said. "I've had an issue for a while with Nortel about their disclosure levels and as business has gotten better their disclosures has actually gotten less," said Steven Levy, an equity analyst at Lehman Brothers. "I didn't think that we would have another accounting issue." Levy guessed that the number of accounting issues at Nortel, rather than their magnitude, is the reason for placing the two executives on paid leave. He continues to rate the stock equal weight with a $7.50 target. Levy doesn't own Nortel shares and Lehman doesn't have an investment-banking relationship with Nortel. In New York Monday, Nortel is down 65 cnents, or 10%, to $5.78 on about 55 million shares. Company Web Site: nortelnetworks.com