Nortel shares sink on titsup fears
Another 20 per cent
Nortel shares fell another 20 per cent yesterday on stories that it has hired lawyers to explore filing for bankruptcy if its latest restructuring fails.
The telecoms equipment maker has watched its shares fall from $15 at the start of the year to just 49 cents today.
The company said yesterday that its $400m a year savings programme was on track for 2009. Responding to a story in the Wall Street Journal that it had hired advisers, Nortel said no bankruptcy filing was imminent.
The company has suffered as telcos have cut back spending or switched to cheaper suppliers. It also has a big debt to deal with - something which is getting much more expensive, especially with its share price in freefall.
Nortel said that the credit crisis was adding to its woes in September as customers cut back spending more than expected.
Mike Zafirovski, Nortel's president and CEO, said: "In September, we signaled our view that a slowdown in the market was taking place. In the weeks since, we have seen worsening economic conditions, together with extreme volatility in the financial, foreign exchange and credit markets globally, further impacting the industry, Nortel and its customers."
He said the company would take further action to cut costs; it will cut 1,300 positions and freeze salaries.
Revenue in the third quarter fell 14 per cent to $2.32bn which it blamed on the economy, competitive pressure and reduced spending by some key carriers. It made a net loss of $3.4bn in the third quarter thanks to write-offs and restructuring costs.
And of course Nortel has been here before - posting a $19.4bn loss in one quarter of 2001. .The company has been around since 1895 when it helped create Canada's phone network
It expects revenue for the full year to be near the bottom of the previously announced range.
Full statement is here. ®