Nortel Networks, the troubled Canadian telecommunications equipment supplier, sprang another unpleasant surprise yesterday, saying third-quarter revenues were likely to be lower than the previous three months and that revenue growth for the year would lag the overall market.
Just one month ago, Nortel projected that its 2004 revenues would outpace the rest of the market. It estimated second-quarter revenues at US$2.6 billion (€2.1 billion), up from $2.5 billion in the first quarter.
The company, which still employs around 700 people in Belfast, is in the throes of restating financial results dating back to 2001 and has yet to produce audited reports for the first two quarters of this year. It said yesterday it expected growth in 2004 revenues to be "in the mid-single digits and that the overall communications equipment market will grow faster than that". Last month's statement projected overall market growth "in the low to mid-single digits".
A Nortel spokeswoman said the company would elaborate on the revenue setback when it reports third-quarter earnings at a yet-to-be-determined date.
Mr Jim Kelleher, analyst at Argus Research, said Nortel had struggled to make headway in the broadband CDMA wireless market against established suppliers such as Ericsson, Nokia and Siemens.
Mr Matthew Hoffman, analyst at Schwab Soundview Capital Markets, interpreted yesterday's revenue warning as a consequence of recent internal upheavals rather than a sign of customer skittishness.
Nortel's accounting practices are under investigation by securities and law-enforcement authorities in the US and Canada. Over the past six months, the company has dismissed 10 senior managers. It is in the process of cutting 10 per cent of its workforce.
Mr William Owens, chief executive, said this week that the company might release restated results for 2003 and the first half of 2004 sooner than its previously announced deadline, October 31st. They were scheduled by the end of September.
The sketchy figures for the first and second quarters published last month were described as "estimated limited preliminary unaudited" data. - (Financial Times Service)
