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

To: Cooters who wrote (13902)	6/2/2004 6:41:16 PM
From: esxtarus	Read Replies (1) \| Respond to of 14638

Morgan Stanley target price 8.00 US BREAKING NEWS UPDATED AT 4:24 PM EDT Wednesday, Jun 2, 2004 Nortel has no date yet By TERRY WEBER Globe and Mail Update E-mail this Article Print this Article Advertisement Related Stories * Nortel to issue status report tomorrow * Nortel continues to get EDC support * Manley joins board of embattled Nortel * Nortel hit by more class-action lawsuits; shares slide 9 per cent * Nortel faces criminal probe Related Stock Charts * Nortel Networks Corp. (nt-t) Nortel Networks Corp. said Wednesday it continues to work through the "complex process" of restating its financial results and won't be in a position to deliver the figures before the end of the month. "The 'how long' is one of the questions that we just can't give you an answer to right now," chief executive officer Bill Owens told analysts, following the release of an investor update on Nortel's progress. The only specifics provided by Nortel on the timing of the probe was a statement indicating that the restatement won't be finished by the end of the second quarter, meaning full year 2003 and first-quarter results for this year remain on hold. Nortel also doesn't plan to file results for the second-quarter until the probe is completed. Asked why the company didn't issue limited, preliminary numbers, Mr. Owens said that at this point it would be better for the markets to wait until the tech giant has concrete information. "There's been a lot of discussion here about whether we should put out some numbers that are our best estimate, and we have just concluded that it is best for the marketplace to be absolutely certain of our numbers," he said. Nortel shares closed down 34 cents or 6.1 per cent to $5.23 in Toronto. In New York — where Nortel was the most actively traded stock — the shares were down 25 cents (U.S.) or 6.1 per cent to $3.83. Nortel late last year restated financial results for 2000, 2001, 2002 and the first half of 2003, resulting in minor changes, but an independent investigation by the company's audit committee discovered more problems this year, leading to the need to restate results for 2001, 2002 and 2003 again. On April 28, Nortel fired its chief executive officer Frank Dunn and two other senior officials, citing accountability for financial reporting. The company said its reported 2003 profit of $732-million likely will be halved when the second restatement is completed, although it added that reported sales figures would not be materially affected. Nortel's April announcement essentially meant it had no reliable financial statements since Jan. 1, 2001. This week, the Ontario Securities Commission extended a cease-trade order for 162 insiders of Nortel, forbidding them to trade the beleaguered technology company's stock until two days after it files all of the necessary financial statements with the regulators. Regulators in the United States are also investigating Brampton, Ont.-based Nortel, as is the U.S. Attorney's Office in Dallas, where Nortel has its U.S. headquarters. Nortel has also said it has also advised the Royal Canadian Mounted Police of its continuing review. Speaking with analysts, Mr. Owens acknowledged that there was little new financial information in the sparse details provided in Wednesday's update. As stated in April, the faded Brampton, Ont.-based tech giant again said net earnings for last year will likely be cut in half, with those amounts moved to earlier periods. That, it said, will result in lower losses in 2002 and 2001. Revenue and cash numbers aren't expected to be affected by the restatements. The status report is required by the Ontario Securities Commission because the company hasn't filed official 2003 results or unaudited 2004 first-quarter numbers. In a statement and subsequent conference call, Nortel executives said the restatements won't be completed in the second quarter and couldn't say how quickly the numbers would be available. However, Mr. Owens also said Nortel's underlying business continues to show "good momentum" and will likely surpass overall sector growth in the low to middle single digits over the long term. "This company has good business momentum; our business model is intact," Mr. Owens told analysts. "Cash and revenue for previous periods are not materially affected ... and our cash position is strong. Our orders are good, our customers are satisfied." At least some analysts agreed that, despite the drag on the company's stock as a result of the restatement's negative connotations, Nortel's business prospects are still solid. "We expect the restatement process and the associated negative news flow should weigh on shares, but believe the company's positive outlook is unchanged," Morgan Stanley analyst Alkesh Shah said in a note to clients, putting a price target of $8 (U.S.) on the stock. "Announced contract wins coupled with an improving business and spending outlook keeps us constructive on shares." During Wednesday's call, Mr. Owens also vowed to "do the right thing" with respect to past management bonuses, although he also said there has been a degree of "misinformation and confusion" about the issue. At the time that the bonus structure was created, he said, Nortel need to find ways to offer incentives to its best workers. Some of the most heated controversy surrounded a return-to-profitability bonus for executives. Mr. Owens wouldn't comment specifically on the appropriateness of that kind of reward, arguing that the restatement process is not yet complete. But those concerns will be addressed at the end of the process, he said. "Management and the board will do the right thing with those compensation awards," he said. E-mail this Article Print this Article Advertisement Not sure whether to go long or short on your mortgage? Why choose? The Long and ShortTM mortgage only from Scotiabank. Site Search Subscribe to The Globe and Mail Sign up for our daily e-mail News Update Come register. It's free. Back to Business Today's Paper Latest Weather Business Poll Quebec has just launched a new law against workplace “psychological harassment” - the first of its kind in North America. Do you think making laws against such behaviour will actually make a difference? Yes No Results & Past Polls Mortgage Rates Compare national rates by lender: See Chart Sponsored by: Current Markets Enter Canadian or U.S. stock symbol(s) or market index: Symbol Lookup Sponsored by: * Disclaimer \| * Privacy Policy \| * * Help & Contact Us \| * Come register. 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