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Nortel reports losses and falling sales

Amid continuing problems with the release of its financial statements, Nortel Networks reported a loss for the third quarter, coupled with a drop in sales from the second quarter.

However, the company added that it expects improvements in fourth-quarter revenue.

The company is the subject of criminal and regulatory investigations by the Ontario Securities Commission and the US Securities and Exchange Commission regarding the restatement of financial results back to 2001.

Due to the work involved in the restatement, the company had not filed financial statements for any quarter this year until this week. It still expects to restate those financial reports in January 2005

For the third quarter, Nortel said it had a "limited estimated unaudited" loss of six cents per share on revenue of $2.3bn (£1.18bn), down from about $2.6bn in the second quarter.

The quarterly loss included about three cents per share in costs associated with the $500m wireless contract it secured from Bharat Sanchar Nigam, the largest telecommunications company in India, Nortel said.

Additionally, restructuring charges of about two cents per share had a negative impact on its bottom line. Those losses were slightly offset by a gain of one cent per share on the transfer of some assets of Nortel's directory and operator services business to a joint venture in return for a minority equity interest in the venture.

Nortel said its customer support remains strong despite its restatement activities and the internal restructuring and realignment programs the company began in August.

As a result, Nortel forecast revenue in the range of $2.8bn to $2.9bn for the fourth quarter and revenue between $10.1bn to $10.2bn for the full 2004 financial year.

Laura Rohde writes for IDG News Service


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