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Nortel Bores in Q4

Nortel Networks Ltd. reported its fourth-quarter and full-year results for 2006 last week, but finally held its conference call this morning to discuss the details. The big takeaway was that the company provided "flat to slightly down" guidance for 2007, which may have sent the wrong signal, given the vendor's UMTS divestiture earlier this year.

For the fourth quarter, Nortel lost $80 million, or $0.19 per share on revenues of $3.32 billion. For the full year, the company earned $28 million, or $0.06 per share on revenues of 11.42 billion. (See Nortel Reports Q4.)

Nortel saw its biggest gains made in its Enterprise Networks division, which saw a jump of 61 percent in revenues and noted key business wins with The New York Times and the Montreal Canadiens, to name a few.

While Nortel is calling for flat numbers for 2007, much of that can be attributed to the divestiture of its UMTS business, which it sold to Alcatel at the end of 2006. UMTS accounted for 6 percent of total revenues, or $660 million.

"We note that the UMTS divestiture represents a 6 percent drag on revenues so on an organic basis, Nortel's guidance of flat to slightly down sales in 2007 likely represents 4 percent to 6 percent order growth," writes Citigroup analyst Michael Genovese in a report released yesterday.

Still, Wall Street as a whole wasn't thrilled with Nortel's results. Tim Long of Banc of America Securities LLC regards Nortel's outlook as "disappointing" and sees little potential for revenue growth.

What still drags on the company is its years-long financial scandal, which led to executive dismissals and charges from the SEC against four former Nortel brass last week. (See SEC Charges Ex-Nortel Execs.) On the call today, Nortel acknowledged its troubled past and said its most recent set of restated earnings had no material impact on its fourth-quarter results. (See Nortel Restates the Restated.) Nortel officials also noted that the financial restatements are finally over. No, really. Seriously. Honest. They mean it.

Shares of Nortel were down $0.29 (1.07%) to $26.74 in early afternoon trading on Monday. — Raymond McConville, Reporter, Light Reading

materialgirl 12/5/2012 | 3:12:06 PM
re: Nortel Bores in Q4 WHat Drags on Nortel is that they do not have much to sell. While they sell futures in PBT and WiMax, what do they have now that is really hot? Even their enterprise deal with MSFT for collaborative software seems shakey, especially after it appers that MSFT is now pushing the call-connection IP they got from NT to the next bidder.
hitekeng 12/5/2012 | 3:12:02 PM
re: Nortel Bores in Q4 You are probably right that Nortel doesn't have new hot products but it has valuable integration and professional services expertise that it had in the past failed to invest. Nortel execs were so stupid (asleep at the wheel, busy inflating stock options, booking future revenues,.. take your pick) to outsource DWDM SAN deployments to IBM (which re-invented itself under Nortel's nose as a premier ICT services company) in a post Sep-911 era where all Fortune-500's have been rushing to upgrade their back-office infrastructure for mirroring!!! So Nortel does not really need new hot products (let Huawei develop them, they excel in rolling out inexpensive quality products but suck royally on service) but should simply focus on its integration expertise and support services. The game is NOT in the products anymore, it is in the end-to-end flawless integration and management for longer term lower TCO rather than short term cheap off-the-shelf commodities!!!
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