Nortel Networks expects its revenue in the third quarter
to fall below the previous quarter's estimated number and for its
full-year 2004 revenue to grow slower than the overall
communications equipment industry.
Last month, Nortel released estimated unaudited revenue of
$5.1bn (£2.8bn) for the first half of this year, with approximately
$2.5bn for the first quarter and $2.6bn for the second quarter.
The network gear maker said it expects the industry as a whole
to have faster revenue growth, according to a statement announcing
Nortel's biweekly regulatory disclosure to the Ontario Securities
Commission. In a disclosure last month, it had projected that its
revenue would outpace the market.
The company, a major supplier of wireless and wireline network
infrastructure, is under investigation by the Ontario Securities
Commission and the US Securities and Exchange Commission regarding
the restatement of its financial results for periods going back as
far as 2001. It is required to submit biweekly updates to the
Ontario regulator.
Nortel now expects to report results for 2003 and the first two
quarters of 2004 by the end of October, according to spokeswoman
Tina Warren.
By the end of this month, the company plans to provide details
of a workforce reduction of about 3,500, or about 10%, that it
announced last month, Warren said. Nortel expects the cuts to cost
about $300mi to $400m and deliver annual savings of about $500m,
she said.
Nortel is having trouble winning new customers in some segments
because of perspective clients who shy away from the company's
perceived problems, according to analyst Frank Dzubeck of
Communications Network Architects.
Nortel's products are good and the company is not on the verge
of being acquired, so potential customers should not be affected,
in Dzubeck's view. A longer perspective is needed, he said.
"If you see that this happens on a quarter-after-quarter basis,
then the trend is indicative... of that fact that there are
problems," Dzubeck said. But it is hard to draw conclusions yet.
"It's all speculative until they restate," he said.
Stephen Lawson writes for IDG News Service