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Nortel issues earnings warning

Nortel Networks has warned investors that its losses would be greater than expected for the first quarter of 2002.

The networking equipment maker expects revenue to be 16% lower than in the fourth quarter of 2001, rather than the 10% decrease it projected in February. Analysts were expecting revenue of $3bn (£2bn) for the first quarter of 2002.

A charge of $200m (£140m) against earnings is included in the projection for pro forma net losses announced yesterday, the company said. It added that the charge stems from removing excess and obsolete inventory from the company's books.

Nortel also announced that it would draw $1.75bn (£1.2bn) in credit from a bank facility due to expire today. The company could not convince all of the banks providing credit to continue the facility beyond its deadline, so the company chose to borrow the full amount offered under its relatively favourable terms offered in order to maintain liquidity, the company said.

Nortel's first-quarter earnings and market outlook are due to be announced on 18 April.

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