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Nortel reported their unaudited financial results for the second quarter of 2006
August 3, 2006
TORONTO -- Nortel Networks(xx) Corporation (NYSE/TSX: NT) today announced that it and its principal operating subsidiary Nortel Networks Limited (NNL) have reported their unaudited financial results for the second quarter of 2006 prepared in accordance with accounting principles generally accepted in the United States. All dollar amounts included are in U.S. dollars.
Second Quarter 2006 Results
Revenues were $2.74 billion for the second quarter of 2006 compared to $2.62 billion for the second quarter of 2005 and $2.38 billion for the first quarter of 2006. The Company reported net earnings in the second quarter of 2006 of $366 million, or $0.08 per common share on a diluted basis, compared to a net loss of $33 million, or ($0.01) per common share on a diluted basis, in the second quarter of 2005 and a net loss of $167 million, or ($0.04) per common share on a diluted basis, in the first quarter of 2006.
Net earnings in the second quarter of 2006 included a shareholder litigation recovery of $510 million reflecting a mark-to-market adjustment of the share portion of the global class action settlement, special charges of $45 million for restructuring and a loss of $10 million on the sale of assets. Net loss in the second quarter of 2005 included special charges of $92 million related to restructuring activities and $11 million of costs related to the sale of businesses and assets. Net loss in the first quarter of 2006 included a benefit of $35 million in gains on the sale of businesses and assets and a shareholder litigation expense of $19 million reflecting a mark-to-market adjustment.
"Our second quarter performance underscores both the challenges and good progress we are making with Nortel's transformation. On the plus side we saw strong order growth of 22% and increased sales momentum but gross margin was up only modestly and not at the 40% target we have set for ourselves," said Mike Zafirovski, president and chief executive officer, Nortel. "We remain intensely focused on delivering improved financial performance and there's solid traction on significant business transformation initiatives including the go-to-market supporting our Enterprise business, the development of our Services business, our strategic alliance with Microsoft, and across the board cost management programs. Together, these efforts are enabling us to deliver greater customer value and substantially enhance Nortel's competitiveness."
Nortel Networks Ltd.
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