Nortel readjusts guidance

(Telephony) The economic downturn barreling throughout the telecommunications sector, seems to be leaving few companies unscathed. Late yesterday, Nortel Networks altered its financial guidance for this fiscal year and the first quarter of 2001.

For the first quarter of 2001, Nortel expects revenues of $6.3 billion and a loss per share from operations of $0.04 on a diluted basis. In addition to the guidance adjustment, Nortel increased the number of employees it plans to let go from 6000 to 10,000.

“Carriers are nervous about the ability to get more capital,” said John Roth, president and CEO of Nortel.

That nervousness has caused service providers to scale back network buildouts and to concentrate on existing infrastructure, according to Roth, who blamed Nortel’s erroneous sales expectations on the circumstances.

Nortel expected the service provider market to return to “business as usual” by the end of January, but that has not happened, Roth said.

“Service providers want to make sure every network is filled up before an expansion is made,” he said.

In addition to the employee downsizing, Nortel will also work to reduce spending as the company concentrates on driving efficiencies.

While Nortel had company this week as far as the guidance readjustment goes, competitor Ciena reported much better than expected earnings for the quarter, pouring salt in Nortel’s freshly cut wounds.