x

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

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE