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

To: Qualified Opinion who wrote (14282)	11/18/2004 8:10:52 PM
From: Joel	Read Replies (1) \| Respond to of 14638

Updated: 12:36 AM EST Former Nortel Worker Warned Firm of Revenue Problems A former systems manager for Nortel Networks Corp. (NT) says he told executives that the company appeared to be booking revenue on products months before the items were shipped to customers, Thursday's Wall Street Journal reported. John Foster, a Nortel veteran who was laid off from the company's Richardson, Texas, operations in 2001, said that he spotted inconsistencies that year in computer records of equipment produced in Nortel's optical-networking division. The records indicated revenue tied to unshipped equipment had already been booked in 2000. By his rough estimates, as much as $900 million of gear may have been reported as shipped to customers while it was still at Nortel's facilities awaiting final engineering work, Mr. Foster said. "There were dates in there that said the equipment had been shipped" to customers, which would allow the company to book the associated revenue, Mr. Foster said in an interview. "Yet we had not done engineering on them yet," and so the gear hadn't been shipped, he said. Mr. Foster is scheduled to be a witness in a Canadian lawsuit filed against the Brampton, Ontario, telecommunications equipment supplier in 2001 by shareholders who claim the company used improper accounting practices, including improper revenue recognition. Joel Rochon, a Toronto lawyer for the plaintiff shareholders, said Mr. Foster isn't receiving compensation for being a witness and isn't among the investors bringing the suit. A Nortel spokeswoman said the company was "aware of the allegations" by Mr. Foster, which were also aired on a Canadian Broadcasting Corp. broadcast. "We continue to vigorously defend ourselves" against the shareholder suit, the spokeswoman said. Amid signs the technology and telecom bubble was bursting and as its stock price was sinking, Nortel in late 2000 was eager to meet its financial targets, particularly in its optical-networking division. In early 2001 the company entered a protracted period of massive layoffs and huge losses as telecom- equipment orders fell off sharply. Wall Street Journal Staff Reporter Mark Heinzl contributed to this report. Dow Jones Newswires 11-18-040027ET Copyright (C) 2004 Dow Jones & Company, Inc. All Rights Reserved. 2004-11-18 00:27 -05 Copyright (C) 2004 Dow Jones & Company, Inc. All Rights Reserved.