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Nortel Scores in Q4

Light Reading
News Analysis
Light Reading
1/29/2004

Nortel Networks Corp. (NYSE/Toronto: NT) appears to have finally recovered from several years of turmoil, as it turned a profit for the year and saw its revenues shoot up 12 percent in one quarter.

Nortel's fourth-quarter revenues were $2.83 billion, compared to $2.53 billion during the year-ago quarter.

The company announced a fourth-quarter profit of $499 million, or 11 cents a diluted share, compared to its net loss of $168 million, or 4 cents a share, during the year-ago quarter.

Nortel's numbers blew the doors off analysts' expectations. Analysts were thinking Nortel would have earnings of 2 cents a share and revenues of $2.44 billion, according to Reuters Research.

The company's earnings included a few exceptional items, including: a $109 million profit from discontinued operations; charges of $14 million for deferred stock option compensation associated with acquisitions; and $9 million in special charges related to restructuring activities. Nortel's numbers also included a net tax benefit of $37 million.

Nortel won't give financial guidance for the first quarter of 2004, except to say that it expects a seasonal decline in revenues.

Compared to last year's results, Nortel's wireless network revenues jumped 33 percent, and its wireline network business climbed nine percent. Its enterprise networks business, however, fell 2 percent, and its optical networks business dropped 18 percent compared to 2002's fourth quarter.

The company was extremely chipper about its VOIP equipment prospects, which makes sense given the recent announcements from Verizon Communications Inc. (NYSE: VZ). "When you look at VOIP... people are going to deploy this technology in 2004," CEO Frank Dunn said on the conference call.

Nortel also ended the quarter with a strong cash balance. It had $4 billion in cash and investments, up from $3.6 billion at the end of the third quarter of 2003.

For the full year 2003, Nortel earned $732 million, or 17 cents a diluted share on revenues of $9.81 billion. In 2002, Nortel reported a net loss of $3.27 billion, or 85 cents a share, on revenues of $10.57 billion.

— Phil Harvey, Senior Editor, Light Reading

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russ4br
russ4br
12/5/2012 | 2:33:15 AM
re: Nortel Scores in Q4
Well - congrats to all the folks at Nortel - both Engineering and the Field. These have been through very tough times - and they have came out very focused from it all.

This is very different from the Lucent "recovery", which seems more like accounting games recovery than real bottom line improvement or top line growth.

- russ
materialgirl
materialgirl
12/5/2012 | 2:33:10 AM
re: Nortel Scores in Q4
I agree that NT has more to offer than LU, however, how much more? I understand that their big Passport switches have an ATM core. Meanwhile, their big IP portfolio seems as weak as LU's if they have to joint venture with AVCI to get the VZ deal. If they have yet to integrate provisioning and management woth AVCI, what do they really have? Edge products?
Fibre Bundle
Fibre Bundle
12/5/2012 | 2:33:09 AM
re: Nortel Scores in Q4
material girl:
"i..if they have to joint venture with AVCI to get
the VZ deal."

AVCI has nothing to do with the VZ deal.

Re-aligning the router partnership with AVCI has
more to do with the fact that JNPR has cozied up
with LU.

Plus, I think NT and JNPR were beginning to see
themselves evolving into much more direct
competitors and adversaries.

FB
materialgirl
materialgirl
12/5/2012 | 2:33:06 AM
re: Nortel Scores in Q4
Dear Fiber:

If AVCI had nothing to do with VZ, why was the deal announced one day after the VZ deal? Why does NT need JNPR or AVCI if they have a credible IP story of their own?
network
network
12/5/2012 | 2:33:03 AM
re: Nortel Scores in Q4
Avici and Verizon....how would you announce this...I am an engineer I'll let the shareholders figure that one out.

Verizon is after Nortel TELE-com equipment, passing and prioritizing ip packets is not the only data game in town.

Nortel might not have a cisco 7xxx in there portfolio, but they have been involved with large IP networks longer than most. I won't say that they are not credible....just not as well known to the non-Tier one customers.

No more sour grapes...if the big guys do well then everyone else will as well. Well means realistic growth....no more VC funded parking lots filled with BMW's I hope!
Physical_Layer
Physical_Layer
12/5/2012 | 2:33:01 AM
re: Nortel Scores in Q4
I agree - Avici has nothing to do with Nortel's Succession strategy. NT has already been cutting over a bunch of Sprint COs in Nevada and Kansas using its own equipment. To do these trunk line upgrades, NT uses its own Media Gateways (MG9000 for line-side adaption to POTS and MG4000 for trunk-side), and they use PP15k for transport, either in ATM format using AAL2 or in an IP format ... doesn't really matter. Then they use their softswitch (based on XA Core) for the brain. No Avici in there.
materialgirl
materialgirl
12/5/2012 | 2:32:54 AM
re: Nortel Scores in Q4
I STILL don't get it. If you don't need an AVCI or a JNPR for a big VoIP network, what is all this talk about "convergence" and "one optical-IP backbone?" There is no separate data network.
FISH
FISH
12/5/2012 | 2:32:53 AM
re: Nortel Scores in Q4
NT Needs to buy an Access company like ARRIS so they can go out end to end with ARRIS MTA's
IPee
IPee
12/5/2012 | 2:32:44 AM
re: Nortel Scores in Q4
They already sold their stake in Arris. they also sold their stake in most of their access products. They partner with Arris (and others) for an end to end solution today. A big company like Nortel will have trouble moving into a 'more' commodity business like Arris has.
TJLeach
TJLeach
12/5/2012 | 2:32:33 AM
re: Nortel Scores in Q4
Materialgirl

You have a good point. I agree with you.
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