Nortel to quit metro Ethernet biz as noose tightens

Nortel Networks has become the latest tech company to cry foul over the worsening economic climate, after revising its full-year outlook downwards, and has admitted it is seeking to explore a divestiture of its metro Ethernet network (MEN) unit.

Nortel Networks has become the latest tech company to cry foul over the worsening economic climate, after revising its full-year outlook downwards, and has admitted it is seeking to explore a divestiture of its metro Ethernet network (MEN) unit.

Canada-based Nortel’s warning comes just hours after both broadline distributor Ingram Micro and PC vendor Dell issued negative trading statements.

According to CEO Mike Zafirovski, full-year revenues are expected to slip between 2% and 4%, with Q3 revenues coming in at around $2.3bn.

Nortel complained that a decline in capital expenditure among carrier customers had hit harder than expected, and added that deferred IT investments among enterprise and metro Ethernet customers were also starting to bite.

In a statement, Nortel said that since reporting its Q2numbers it had started to see further pressure on revenue due to foreign exchange impact and product delivery delays.

Zafirovski said: “It is clear that the environment in which we operate requires immediate and decisive actions. A comprehensive review of our business is taking place and we are determined to reshape the company to establish a clear path for renewed value.”

He added that the divestiture of the MEN unit would go someway to strengthening Nortel’s flagging balance sheet and funding the anticipated restructuring.

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