Nortel posts loss, sees stabilization

Nortel Networks posted a $3.47 billion net loss from continuing operations for the third quarter, driven largely by charges related to the company’s ongoing restructuring.

Among the charges the company recorded was a $750 million write down for excess and obsolete inventory; a $801 million charge from work-force reductions and the closure of certain facilities; and a $767 million charge from increased provisions related to trade receivables and customer financing.

Including these and other charges as well as acquisition-related costs, Nortel posted a loss per share of $1.08. Excluding these charges, the company’s pro forma net loss was 27 cents per share, beating the consensus analyst estimate by 1 cent. Revenues for the quarter were $3.69 billion.

Among individual units, Nortel’s network infrastructure division posted sales of $2.8 billion, down 48% year-over-year. The company’s photonic components division was even harder hit, down 93% on sales of $45 million.

Though the company declined to provide guidance for the fourth quarter and all of 2002, Nortel is seeing stabilization in its business, primarily among North American carriers who have completed their cuts and are beginning to look ahead, according to outgoing CEO John Roth.

“The correction in capex spending from the levels we enjoyed during the telecom boom to the more sustainable levels is showing signs of stabilizing,” Roth said. “Many of our customers have already cut their expenditure levels to the run rate that they intend to carry next year.”

In addition, the company significantly improved its liquidity during the quarter, showing cash and cash equivalents of $3.36 billion--an increase from $1.93 billion at the end of the second quarter. The company also significantly reduced its inventory, to $1.99 billion, from $2.63 billion.