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To: Johnny Canuck who wrote (17237)	7/22/1998 6:10:00 AM
From: Johnny Canuck	Respond to of 69822

Wednesday, July 22, 1998 Nortel rises on profit surprise BY PHILIP DEMONT Telecom Reporter The Financial Post ÿShares of Northern Telecom Ltd. (NTL/TSE, ME) jumped $2.25 to $91 yesterday as the company beat analysts' consensus estimates of operating earnings for the second quarter. ÿThe telecommunications equipment manufacturer posted profit before extraordinary items of US$217 million (US41› a share) for the three months ended June 30, compared with US$165 million (US32›) a year ago. Analysts had forecast earnings from operations of US32› for the April to June period. ÿNortel should show even better results as its new acquisition, U.S. local area network specialist Bay Networks Inc., is integrated into its operations, said president and chief executive John Roth. ÿ"Some of our chief competitors could walk into customers and offer both sides [the wide and local area networks]," he said. "Now we can." ÿNortel bought Bay Networks last month in a US$9-billion stock transaction. ÿWith expected writeoffs, Nortel had a net loss for the second quarter of US$69 million (US13›), compared with net income of US$165 million (US32›) a year earlier. It absorbed a US$286-million writeoff from research and development at recent acquisitions. It has written off US$490 million in the first half of the year related to these costs, and expects to write off an additional US$185 million in the third quarter. ÿRevenue hit US$4.2 billion for the latest three-month period, an increase of 9.7% over the same quarter last year. ÿNortel benefited from strong growth in its broadband business, which totalled US$1 billion, up 28% from the April-June period last year. ÿDespite better-than-expected returns, some analysts wonder if investors are too enthusiastic about the company's prospects. "I'm feeling very uncomfortable about Nortel at these valuations," said Gurinder Parhar of HSBC Securities Inc. ÿNortel posted a 13% gain in its data equipment business during the quarter, even though the overall market is growing at a faster clip, he said. ÿ