No news is good news for Nortel
Our closet is empty
Nortel Networks shares jumped 13 per cent yesterday on news that there was no more bad news from the company. Nortel, which is under investigation by Canadian and US securities regulators, has to update the Ontario Securities Commission every two weeks.
Analysts reacted with joy to news that the networking equipment maker had no more bad news to report. The company is the midst of restating financial results for 2003.
The statement said: "There have been no material developments in the matters reported in their status updates of June 2 and June 29 2004 with the exception of the matters described below."
Accountants believe net earnings for 2003 will be 50 per cent lower than previously reported, but warned that investigatons are continuing. Nortel hopes to announce prelimary unaudited results for the first and second quarters of 2004 by mid-August. It expects to file results for 2003 in the third quarter of 2004.
Bill Owens, president and CEO of Nortel, said he was pleased with the progress the company is making in sorting out its accounts and with its sales. He predicted the company would outperform the market, which he expects to grow in low to mid-single digits.
But it has "become clear that we will need to put into place an improved cost structure to drive financial performance", he said.
Last month, the firm announced the sale of its manufacturing operations to Flextronics for between $675m and $725m. It aims to save $100m a year through the deal. But after this, what needs to be done? Sounds like more job cuts could be on the way. ®