Feeds

Nortel re-restates results, fires CEO

Incredible shrinking earnings

  • alert
  • submit to reddit

Boost IT visibility and business value

Nortel Networks today sacked its CEO, CFO and controller and said it would restate financial results for the second time in five months. Earnings for 2003 will only be half of what was previously stated, said Nortel, which will delay future earnings results and keep plugging away with an internal investigation into accounting practices.

Nortel has sent CEO Frank Dunn packing and tapped former Teledesic - a satellite communications company - CEO William Owens as his replacement. Former CFO Douglas Beatty and former controller Michael Gollogly will leave as well, with William Kerr and MaryAnne Pahapill filling the respective posts. In March, Nortel placed Beatty and Gollogly on paid leave of absence. Four unnamed senior finance executives have been placed on paid leave of absence, while the internal investigation continues.

"The Board of Directors believes that the actions announced today are about accountability for our financial reporting and are in the best interests of the Company and all of its stakeholders, including our investors, customers and employees," said Lynton Wilson, Nortel's Chairman. "These actions are an important step in the process of restoring confidence in the Company's leadership and financial reporting."

Nortel joins fellow IT giant Computer Associates on a less than impressive list of companies that have replaced their CEOs this month due to accounting concerns. CA turned former CEO Sanjay Kumar into a chief software architect and restated figures for 2000 and 2001.

Nortel has yet to determine "the full extent of adjustments that will be required" to its own figures, but it does know that net earnings for 2003 will likely be lowered by close to 50 percent. The earnings will transfer to previous fiscal periods, lowering net losses for 2002 and 2001. Nortel does not expect a "material impact" to past revenue totals.

"In addition, in light of the foregoing, the Company has not finalized its financial statements as at December 31, 2003," Nortel said. "At this time, the Company cannot estimate the impact of any such adjustments on its results of operations or financial position." Nortel has been a bit vague in the particulars of the accounting snafus. The company has confirmed that auditors found $900m in liabilities that had been accounted for in an incorrect manner.

The US SEC (Securities and Exchange Commission) and Staff of the Ontario Securities Commission (the OSC) are currently investigating Nortel. ®

Related stories

Nortel suspends finance chiefs
Nortel delays results
Networking sector haunted (still) by dotcom collapse

Maximizing your infrastructure through virtualization

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.