Nortel Blows Past 4Q Earnings Estimates

The Brampton, Ontario-based networking vendor also reported a full-year profit for 2003, its first in six years.

For the fourth quarter ended Dec. 31, Nortel reported earnings of $499 million, or 11 cents per share, compared with a loss of $168 million, or 4 cents per share, the same quarter a year ago.

The company earned $390 million, or 9 cents per share, from continuing operations, compared with a loss of $167 million, or 4 cents per share, the same quarter a year ago.

Revenue for the quarter rose 12 percent to $2.83 billion, up from $2.53 billion in the same quarter a year ago.

Financial analysts expected the networking vendor to earn 2 cents per share on revenue of $2.45 billion, according to Thompson Financial/First Call.

Nortel's wireless networks business saw revenue growth of 33 percent compared with the same quarter a year ago. Wireline networks business revenue grew 9 percent, while optical networks revenue decreased 18 percent.

Revenue from Nortel's enterprise business dropped 2 percent compared with the same quarter a year ago but grew 10 percent compared with the previous quarter, showing what Nortel called "continued momentum."

Frank Dunn, Nortel's president and CEO, attributed that momentum to improvements in the performance of the vendor's channel partners.

"We've invested very heavily in a broad-based, I think world-class, portfolio in enterprise. Our bigger challenge in the last six, nine months, 12 months, was to get our channels and our partners really aligned with us, trained with us and moving aggressively into the enterprise space with our direct touch organization, and we've seen a lot of traction on a global basis," Dunn said during a conference call to discuss the financial results.

For 2003, Nortel turned in its first full-year profit since 1997, earning $740 million, or 17 cents per share, compared with a loss of $3.27 billion, or 85 cents per share, in 2002.

Revenue for the year dropped to $9.81 billion, down from $10.57 billion in 2002.

Financial analysts expected Nortel to report full-year earnings of 5 cents per share on revenue of $9.45 billion, according to Thomson Financial/First Call.

The company expects a seasonal decline in revenues for the first quarter of 2004 compared with the fourth quarter of 2003.

Shares of Nortel closed up 12 cents at $6.58 Thursday prior to the announcement.