Nortel Plunges on New Forecast
Shares slide 40% on Nortel's new look for 2008
Nortel Networks Ltd. shares are down nearly 40 percent on the company's lowered outlook and the news that it wants to sell its Metro Ethernet Networks (MEN) business.
The MEN division includes Nortel's optical business and its carrier Ethernet work, including its Provider Backbone Transport (PBT) technology. (See Nortel to Sell Carrier Ethernet, Optical Biz.)
That's big news, but so is the lowered forecast. After predicting single-digit sales growth this year, Nortel is now saying its 2008 revenues will be 2 to 4 percent less than the $10.95 billion it reported in 2007.
Nortel shares opened down 21 percent this morning and have continued to fall. At press time, Nortel was trading down $2.07 (39.1%) at $3.23.
An early sign of trouble came last month with Nortel's second-quarter earnings, highlighted by soft CDMA sales. In reporting that news, though, Nortel had insisted it was still prepared to meet its 2008 targets. (See CDMA, Charges Knock Nortel.)
Nortel's MEN, which comprised 14 percent of 2007 sales, is arguably showing some promise. While PBT -- known as PBB-TE in IEEE circles -- remains an issue of debate, it's certainly piqued some interest. And while Nortel isn't leading the 40-Gbit/s optical market, it seems to be building a good reputation there. (See Nortel Rolls On With 40-Gig.)
— Craig Matsumoto, West Coast Editor, Light Reading
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