Nortel Not Ready To Provide Restated Results

The restated results date back to 2001. In a conference call on the status of the ongoing independent review of Nortel's accounting, President and CEO Bill Owens characterized the restatement as "of the highest importance."

"We will get this done as promptly as possible in line with doing it correctly, and we will fix our financial systems to report accurately and transparently in the future," Owens said.

Owens, who joined Brampton, Ontario-based Nortel about a month ago in a flurry of personnel changes, pledged that the company will drive revenue growth, build up its cash balance and cut costs to address new competitors operating in low-cost labor markets, such as Chinese networking vendor Huawei Technologies.

"We will get through this accounting restatement and will do so in good shape," Owens said, adding that Nortel expects to grow faster than the overall telecommunications market.

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Nortel executives couldn't give a timetable for the review's completion. To help speed the process, the company has brought in Ernst and Young to provide advisory services and additional accounting resources.

In addition, Nortel reiterated that it expects to report approximately a 50 percent reduction of previously reported earnings for 2003. The company also said it will report a loss for the first half of 2003, whereas it previously announced a profit for the period.

Owens said Nortel expects no material impact to previously announced revenue figures or the company's cash balance.

At the end of April, Nortel fired President and CEO Frank Dunn and several other executives amid the independent review, which began in the fall.

The U.S. Securities and Exchange Commission and the Ontario Securities Commission have launched investigations into Nortel's finances. In May, the company also received a subpoena to produce documents for a federal grand jury in connection with an ongoing criminal investigation by the U.S. Attorney's Office for the Northern District of Texas, Dallas Division. In addition, 27 class-action lawsuits are pending against Nortel in the United States.