In the process, the company's getting buffeted by criticism and speculation. It seems more dark heralds are expected from Ottawa, although just what the news will be (and how bad for shareholders) appears to be an open question.
In an effort to sift rumor from revelation, here's a rundown of the latest scuttlebutt and what it may -- or may not -- mean:
Will these cuts of roughly 4,600 more this quarter be enough to lighten the operating load? Only time will tell. "The whole sector is suffering. We don't see a recovery this year and maybe not next. You're going to see more restructuring in general for the industry," says analyst Nikos Theodosopoulos of UBS Warburg.
But it looks as if the dip in expectations won’t be too deep, at least in the short term. In a note dated March 15, for instance, Theodosopoulos and colleague Michael Urlocker of UBS Warburg predicted that Nortel will post a loss of $0.14 per share this quarter. Nortel had predicted its revenues would be about 10 percent lower than the last quarter, when the company posted a loss per share of $0.16 (see Nortel Reports on Q4).
Still, over the long term, the ongoing downturn appears to be taking its toll, and analysts aren't happy about its effects on Nortel. "We are reducing our NT estimates and price target based on continuing industry weakness," Theodosopoulos wrote last week. "Our new 2002 and 2003 estimates are -$0.25 and $0.08 down from -$0.19 and $0.21 respectively. Our new revenue estimates for 2002 and 2003 are $13.4B and $15.0B down from $14.95B and $17.4B respectively."
Both seem outlandish to some sources. "I think the Motorola thing came from some bankers hopefully speculating," says the unnamed analyst quoted earlier. "And, hopefully, Cisco learned its lesson with Pirelli."
In its recent annual report, Nortel revealed to what extent its overall sales have slowed and indicated that optical networking, optical Ethernet, and even wireless are coming up short:
Other concerns center on Nortel's management. New CEO Frank Dunn appears to be a relative unknown to many on Wall Street. Worse, he seems to be thought of as "old guard" and stodgy, someone who may be unable to help pull the company through the industry doldrums.
— Mary Jander, Senior Editor, Light Reading