Nortel Culls 1,300 Jobs, Loses $3.4B
The revamp of the company into more autonomous business operations has resulted in the departure of a number of well known senior executives, including CTO John Roese and the president of Nortel's Global Services division, Dietmar Wendt.
Details of the restructuring plan came as the vendor announced its third-quarter results, which met the revised guidance issued in September, and which included $3.21 billion of non-cash writedowns that plunged the company deep into the red. (See Nortel Reports Q3 and Nortel Plunges on New Forecast.)
Here are the main details covering Nortel's financials, restructuring, and future outlook:
Third-quarter results and full-year outlook
Nortel reported revenues of $2.32 billion, down 14 percent compared with a year ago, and in line with the lowered guidance provided in mid-September.
The third-quarter gross margin was 39.2 percent, down from last year's 43 percent and the 43.1 percent margin it achieved in the second quarter. (See CDMA, Charges Knock Nortel.)
Nortel says an "unfavorable product mix" was the cause of the margin dip in the third quarter. However, the vendor is still guiding for a full-year gross margin of about 42 percent.
The net loss in the third quarter was $3.41 billion, though that included one-time non-cash charges of $3.21 billion, comprising a $1.14 goodwill writedown against enterprise and carrier business assets and a $2.07 billion revaluation of its deferred tax assets. A year ago Nortel reported a net profit of $27 million.
Discounting all one-time financial items, Nortel's net loss was $150 million, or $0.30 per share, in line with Wall Street's expectations.
The company's outlook isn't too favorable either. Nortel expects full-year revenues to be about 4 percent lower than last year's $10.95 billion, a forecast that suggests 2008 revenues of $10.51 billion. Given the current global economic downturn, though, the company noted that "actual results may be lower than these current expectations."
The vendor also noted today that its order book during the third quarter was slightly more than $2 billion, compared with $2.38 billion a year ago and $2.15 billion during the second quarter.
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