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Optical/IP

Nortel Posts Q1 Loss

Nortel Networks Ltd. (NYSE/Toronto: NT) dipped into the red in the three months ended March 31, 2005, but recorded higher revenues than a year earlier and at last appears to be catching up with its financial reporting requirements.

The company filed its quarterly results with the Securities and Exchange Commission (SEC) late on Tuesday and has issued a news release today to spell out its first-quarter performance (see Nortel Reports Q1 Loss).

The SEC filing showed first-quarter revenues of $2.54 billion, slightly ahead of an average of analysts' estimates, and a net loss of $49 million, or 1 cent per share. Analysts had expected the vendor to break even on revenues of $2.52 billion.

Those figures compare to year-ago revenues of $2.44 billion and a net profit of $59 million, or 1 cent per share, and fourth-quarter revenues of $2.62 billion, and a net profit of $133 million, or 3 cents per share (see Nortel Reports Q4).

Wireless infrastructure sales account for the majority of Nortel's revenues. CDMA equipment revenues were $535 million, and GSM/UMTS network gear sales totaled $788 million, for a total of $1.323 billion, or 52 percent of all revenues.

The vendor's Carrier Packet Networks business recorded revenues of $664 million, and Enterprise Networks sales amounted to $547 million, with "other" revenues making up the remaining $2 million.

Gross margins in the first quarter were 41.7 percent, down from 43.1 percent a year earlier. Nortel expects its gross margins to remain in the range of 40 to 44 percent for the remainder of 2005, while it expects "continued growth in revenues compared to 2004."

The company noted a number of industry trends affecting the remainder of this year, though. Nortel expects carrier consolidation in North America to "result in a net reduction in customer spending as these service providers focus on improving the efficiency of their combined networks rather than network expansion."

It also noted the growing influence of Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763). "Competition in the industry remains strong and our traditional large competitors, newer competitors, particularly from China, and certain smaller niche competitors continue to increase their market share and create pricing and margin pressures," Nortel stated in its filing.

But the vendor also noted specific growth opportunities in "emerging markets such as China and India," citing its wireless infrastructure contract with Indian operator Bharat Sanchar Nigam Ltd. (BSNL) as an example (see BSNL Selects Nortel).

Nortel has suffered an accounting nightmare in the past year and a half, but it now seems close to sorting its internal issues and putting a new reporting structure in place. (See Nortel Rattles Nerves, Nortel CFO Out , Nortel Fires CEO, SEC Pops In on Nortel, and Dunn's Done With Nortel .)

Nortel's share price closed Tuesday at $2.59.

— Ray Le Maistre, International News Editor, Light Reading

LightMan 12/5/2012 | 3:12:44 AM
re: Nortel Posts Q1 Loss I'm feeling better about holding onto my shares. First time in 1, no 4 years..
DZED 12/5/2012 | 3:12:46 AM
re: Nortel Posts Q1 Loss "I think they are trying to hide the fact that other than wireless, things are dismal."

So Nortel really need to overpay Bookham for optical components?
Machavelli 12/5/2012 | 3:12:50 AM
re: Nortel Posts Q1 Loss The following statement by Sanford Bernstein analyst Paul Sagawa summarizes the struggle Nortel is still facing against the revived Lucent. This is on top of its other problems like carrier consolidation and eroding margins that Nortel mentioned.

"One company grew their wireless business 4.5% over the last four quarters, and the other grew wireless 33% over the same time frame," says Sagawa. "One company has lost market share in every one of its main businesses over the past two years, while the other is the fastest-growing supplier of wireless infrastructure in the world."

Mach
dodo 12/5/2012 | 3:12:52 AM
re: Nortel Posts Q1 Loss Effective October 1, 2004, we established a new streamlined organizational structure that included, among other things, combining the businesses of our four reportable segments into two business organizations: (i) Carrier Networks and Global Operations, and (ii) Enterprise Networks.
We have reviewed the impact of these changes on our reportable segments and concluded that, although certain structural changes were made to reflect this reorganization effective October 1, 2004, we did not meet the criteria to change our reportable segments under Statement of Financial Accounting Standards, or SFAS, No. 131, "Disclosures about Segments of an Enterprise and Related Information" for the 2004 fiscal year. Our operating results on a segmented basis for the new business organizations were not available for review by our chief operating decision maker, as a significant amount of our finance resources were allocated to our restatement activity discussed in greater detail under "Developments in 2004 and 2005".

These two business organizations include four operating segments. The four operating segments are:
Carrier Packet Networks, which is substantially an amalgamation of our previous Wireline Networks and Optical Networks businesses;
CDMA Networks, which was previously part of Wireless Networks;
GSM and UMTS Networks which was also previously part of Wireless Networks; and
Enterprise Networks, which remains substantially unchanged from the previous organization. For the first quarter of 2005 these four operating segments will become our reportable segments.
dodo 12/5/2012 | 3:12:52 AM
re: Nortel Posts Q1 Loss "there has been an internal merger between optical and carrier data to carrier packet"

Back to 1999 when they had a Carrier Packet Network BU (minus Optera Packet solutions ;( eek)













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NoCopper 12/5/2012 | 3:12:53 AM
re: Nortel Posts Q1 Loss there has been an internal merger between optical and carrier data to carrier packet.
Prizm 12/5/2012 | 3:12:55 AM
re: Nortel Posts Q1 Loss There is no mention of optical revenues in the press release!

They have reclassified their revenue segments yet again. I think they are trying to hide the fact that other than wireless, things are dismal.

Prizm
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