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Nortel's Pretty Penny

Nortel Networks Ltd. (NYSE/Toronto: NT) shares rose $0.21 (8%) to $2.85 this morning on news the company earned a penny a share in profits and increased revenues by 10 percent.

Nortel said that second-quarter 2005 revenues came in at $2.86 billion, up 10 percent from the year-ago period. It earned $45 million, 1 cent a share, on a diluted basis. While its profit number was even with analysts' estimates, Nortel beat analysts' revenue expectations of $2.69 billion, according to Reuters Research.

The news appeared to give investors a pleasant surprise, judging from the reaction in the stock -- perhaps because Nortel investors have come to expect the worst after Nortel has suffered a series of accounting missteps, an investigation by the Securities and Exchange Commission (SEC), and some serious executive shuffling. (See Nortel COO Resigns , Nortel Issues Update, Nortel Posts Q1 Loss, Nortel Changes CTO – Again , Nortel Details Q3 '04 Loss, , and Nortel's Retro Quarters .)

Growth in revenues came primarily from Nortel's enterprise networking gear division. Here's the breakdown of revenue in Nortel's various business units:

  • Enterprise Networks revenues were $730 million, an increase of 26 percent compared with the year-ago quarter and an increase of 33 percent sequentially.

  • The GSM and UMTS Networks division reported revenues of $719 million, an increase of 1 percent compared with the year-ago quarter and a decrease of 9 percent sequentially.

  • CDMA Networks revenues were $662 million, an increase of 17 percent compared with the year-ago quarter and an increase of 24 percent sequentially.

  • Carrier Packet Networks reported revenues of $743 million, an increase of 3 percent compared with the year-ago quarter and an increase of 12 percent sequentially.
Nortel's cash balance at the end of the second quarter of 2005 stood at $3.06 billion, down from $3.43 billion at the end of the first quarter of 2005. The company reported the decrease in cash was "primarily driven by a cash outflow from investing activities of $409 million, which was partially offset by a cash inflow from continuing operating activities of $104 million." The investing activities included a payment of $423 million, net of cash acquired, for the acquisition of PEC Solutions, and the operating activities included cash payments for restructuring of $63 million (see Nortel Goes to Washington).

— R. Scott Raynovich, US Editor, Light Reading

hitekeng 12/5/2012 | 3:06:02 AM
re: Nortel's Pretty Penny Funny that good news do not stir emotions but bad news trigger an endless thread of messages.
At any rate, Nortel is doing better now but consolidation will continue and employees will unfortunately be bearing the brunt of it. You would hope, once consolidation is over and the house is in order, that things will get much better. You will however come to find out that... (you will figure it out).
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