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Nortel Warns of Shortfall, More Layoffs

Light Reading
News Analysis
Light Reading
3/27/2001

After the markets closed today, Nortel Networks Corp. (NYSE/Toronto: NT) issued a gloomy press release stating that its quarterly revenues will fall short of previous guidance and that the company will pursue further cost-cutting measures, including as many as 15,000 layoffs (see Nortel Lowers Q1 Outlook).

The company now expects revenues in the range of US$6.1 billion to $6.2 billion and a loss per share from operations in the range of $0.10 to $0.12 for the quarter. This is below the company's previous estimates, provided on February 15, 2001, of $6.3 billion of revenue and loss per share from operations of $0.04.

In after-hours trading on the Island ECN, Nortel shares were trading at $15, down 1.76 (11%) from Tuesday's closing price of 16.76. During regular hours trading on Tuesday, shares had fallen 0.16 (0.95%).

CEO John Roth said the company could give no clear indication of when things would get better.

"Given the poor visibility into the duration and breadth of the economic downturn and its impact on the overall market growth in 2001, it is not possible to provide meaningful guidance for the company's financial performance for the full year 2001," Roth said in the statement.

By the middle of 2001, the company said it expects to have 79,500 employees. That's 15,000 fewer than its Dec. 31, 2000 headcount of about 94,500 employees.

"We continue to align our cost structure and industry-leading product portfolio with our customers' priorities and plans," Roth said.

-- R. Scott Raynovich, executive editor,Light Reading http://www.lightreading.com

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voyeur
voyeur
12/4/2012 | 8:39:52 PM
re: Nortel Warns of Shortfall, More Layoffs
Maybe Roth has less time than expected. As I conjectured in an earlier post, Roth has to turn the ship around quickly, otherwise, he joins Rich McGinn in the lucky millionaires club. Who's next? John Chambers would make the trifecta.
HarryPotter
HarryPotter
12/4/2012 | 8:39:50 PM
re: Nortel Warns of Shortfall, More Layoffs
ha! nt blowing up when lu prices agr, nt just trying to screw lu!!
ownstock
ownstock
12/4/2012 | 8:39:49 PM
re: Nortel Warns of Shortfall, More Layoffs
...and with a mighty effort on the part of NT management, we just managed, against the market and all odds, to make our lowered numbers...and screw LU in the deal too...pass the perks!
gladysnight
gladysnight
12/4/2012 | 8:39:49 PM
re: Nortel Warns of Shortfall, More Layoffs
for goodness sake, people!!

The really scary part of Roth's message was the "not possible to provide meaningful guidance"

if HE can't tell us, then who can?

. . and my reading is that making 10 to 12 cents loss ratehr than the anticipated 4c, is not exactly "making the numbers" . . .

NT is now flying blind, hoo-bloody-ray!

yet another stock I wouldn't touch . . .
LightBeating
LightBeating
12/4/2012 | 8:39:45 PM
re: Nortel Warns of Shortfall, More Layoffs
I used to think that Nortel was a fundamentally good company. Now, I believe they're fundamentlly flawed!

It's easy for Roth to blame everything on the "economic downturn". But could it be that their products are not as good as they should be?

I just received their annual report, and there was a lot of interesting information as to the status of their numerous recent acquisitions. They acquired for nearly $30B over the past 2 years! However, big ones like Q-tera, Xros, Coretek, are still not generating revenues, and won't be doing so until the second semester 2001 (which is a way of saying "we don't know"). Therefore the whole of Nortel's all-optical strategy, which consisted of buying unproven technology at a hefty premium, is still months from returning any payoff.

Newcomers like Corvis, however criticized they may be, do generate actual revenues from their all-optical, long haul product.

Could it be that Nortel is losing that battle?

LightBeating
flip wilson
flip wilson
12/4/2012 | 8:39:45 PM
re: Nortel Warns of Shortfall, More Layoffs
You have no website and your url is owned by a person in living in Pennsylvania with an AOL contact address. You dont even have a server up.
voyeur
voyeur
12/4/2012 | 8:39:38 PM
re: Nortel Warns of Shortfall, More Layoffs
Ownstock,

If you keep on making your numbers (i.e. losses), not only will you screw LU, you screw yourself. If you're lucky, you are one of the 15,000 who gets a package and actually starts to work for a living.

Don't you realize that when one big guy has trouble that everyone else feels the pain? Whether you are a competitor or supplier,there is a ripple effect and everyone's stock goes lower. Just another rally snuffed by lack of visibility!!!
dlharding
dlharding
12/4/2012 | 8:39:37 PM
re: Nortel Warns of Shortfall, More Layoffs
Seems like it will be harder and harder for the folks at RHK and Del'Oro to keep pushing out those Pro-Nortel press releases and Market share reports in light of this announcement......
Belzebutt
Belzebutt
12/4/2012 | 8:39:36 PM
re: Nortel Warns of Shortfall, More Layoffs
"Seems like it will be harder and harder for the folks at RHK and Del'Oro to keep pushing out those Pro-Nortel press releases and Market share reports in light of this announcement......"

Yes we all know these press releases have nothing to do with market share and are just based on the formula

(Money_paid_to_RHK + Money_paid_to_Del'Oro) * Quarterly_profits / Headcount = Amount_of_positive_spin


Please, stick to accusing LR of NT bias...
Belzebutt
Belzebutt
12/4/2012 | 8:39:36 PM
re: Nortel Warns of Shortfall, More Layoffs
"But could it be that their products are not as good as they should be?"

Nortel became #1 in the telecom sector this year and their revenue growth has only been exceeded by Cisco, out of their major competitors. They're doing something right.

The billion-dollar acquisitions you talk about happened at a time when Nortel stock was worth 5 times more than it is now, so put this into perspective. Everyone was making huge aquisitions at that time, especially LU which paid a few times more for Ascend than NT paid for Bay. These small optical companies that Nortel bought had products that were far from being on the market, and it takes even longer to fold them into the NT product line than it would have taken to put them out on their own. At least you know now nt HAS the tech.

If Nortel's acquisition strategy is flawed, then Cisco must be terrible, because they used to make many more qcquisitions than NT.

With the so-called "economic downturn" it's also possible that carriers won't be as eager to invest in a new all-optical infrastructure right away and may instead opt to buy more traditional SONET gear to supplement their existing networks.
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