Nortel Again Cuts Third Quarter Outlook

Nortel Networks

Nortel, which has cut jobs and costs amid a sluggish market for telecommunications gear, now expects revenue to fall by about 15 percent, compared with the second quarter.

Last month, the Canadian telecom-equipment maker forecast a decline of "up to approximately 10 percent."

Nortel's second-quarter pro forma loss from continuing operations was $323 million, or nine cents a share, on revenue of $2.77 billion.

The company again blamed deteriorating U.S. telecom-equipment spending, particularly in Asia.

Nortel also announced a plan to consolidate its shares to avoid a delisting by the New York Stock Exchange. Early Thursday morning, Nortel stock fell 12 cents to 52 cents per share.

Nortel's share price has traded below $1 on the NYSE on average for 30 trading days, violating the exchange's minimum listing requirements. The company said it plans to propose a reverse stock split so its shares will trade in the range of $10 to $20. Nortel will seek shareholder approval for the reverse split in spring 2003.

Analysts surveyed by Thomson First Call project a pro forma loss from continuing operations of seven cents a share and revenue of $2.53 billion for the third quarter.

Nortel said in August that it would cut 7,000 more workers in an effort to lower its break-even level to $2.6 billion in quarterly sales, down from $3.2 billion. Nortel had already reduced 54,000 workers from its peak employment in late 2000.

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