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Nortel losses soar, re-stating earnings once again
By Ottawa Business Journal Staff
Fri, Mar 10, 2006 8:00 AM EST
Mike Zafirovski, Nortel president and CEO
Nortel Networks is swimming in red ink and will once again have to re-state earnings.
The telecom giant says preliminary Q4 results show the company lost US$2.2 billion in the quarter, and US$2.4 billion for the entire year. Full year results will be published at the end of April.
Most of the loss was attributed to $2.5 billion in legal expenses to settle shareholder lawsuits arising from its earlier accounting scandal.
Nortel will restate financial results for 2003, 2004 and the first nine months of 2005, and will have adjustments to periods prior to 2003, primarily due to revenue incorrectly recognized in prior periods that should have been deferred to future periods.
Nortel says it expects the revisions for 2003 and 2004 to reduce revenues by US$157 million and US$77 million respectively. For the first nine months of 2005, revenue will be reduced by US$162 million.
"Our priority is to have accurate financial information. Although the need to restate certain financial statements is unfortunate, it's the right thing to do. This revenue is real - it was recognized in the wrong periods," president and CEO Mike Zafirovski said in a statement. "The extensive contract review we undertook in 2005 underscores our commitment to ensure a solid foundation for this company going forward. Though it will take time, our unwavering commitment to be among the top companies in the world in corporate governance and business and financial controls remains."
Q4 revenues were US$2.95 billion compared to US$2.59 billion for the fourth quarter of 2004. The net loss was US$2.21 billion or 51 cents a share.
"We are certainly not satisfied with our financial results which in my opinion have not been good in terms of growth, operating margins and cash flows since 1998," Mr. Zafirovsky said. "We are working diligently to rectify this and we expect that you will start to see improved results during 2006."
Mr. Zafirovski re-iterated Nortel's goal to pursue market opportunities only where the company can achieve a leadership position and at least 20 percent market share. A review of R&D spending continues.
"You can expect us to continue to share details related to R&D prioritization as decisions are made over the next 12 months," said Mr. Zafirovski.
By Ottawa Business Journal Staff
Fri, Mar 10, 2006 8:00 AM EST
Mike Zafirovski, Nortel president and CEO
Nortel Networks is swimming in red ink and will once again have to re-state earnings.
The telecom giant says preliminary Q4 results show the company lost US$2.2 billion in the quarter, and US$2.4 billion for the entire year. Full year results will be published at the end of April.
Most of the loss was attributed to $2.5 billion in legal expenses to settle shareholder lawsuits arising from its earlier accounting scandal.
Nortel will restate financial results for 2003, 2004 and the first nine months of 2005, and will have adjustments to periods prior to 2003, primarily due to revenue incorrectly recognized in prior periods that should have been deferred to future periods.
Nortel says it expects the revisions for 2003 and 2004 to reduce revenues by US$157 million and US$77 million respectively. For the first nine months of 2005, revenue will be reduced by US$162 million.
"Our priority is to have accurate financial information. Although the need to restate certain financial statements is unfortunate, it's the right thing to do. This revenue is real - it was recognized in the wrong periods," president and CEO Mike Zafirovski said in a statement. "The extensive contract review we undertook in 2005 underscores our commitment to ensure a solid foundation for this company going forward. Though it will take time, our unwavering commitment to be among the top companies in the world in corporate governance and business and financial controls remains."
Q4 revenues were US$2.95 billion compared to US$2.59 billion for the fourth quarter of 2004. The net loss was US$2.21 billion or 51 cents a share.
"We are certainly not satisfied with our financial results which in my opinion have not been good in terms of growth, operating margins and cash flows since 1998," Mr. Zafirovsky said. "We are working diligently to rectify this and we expect that you will start to see improved results during 2006."
Mr. Zafirovski re-iterated Nortel's goal to pursue market opportunities only where the company can achieve a leadership position and at least 20 percent market share. A review of R&D spending continues.
"You can expect us to continue to share details related to R&D prioritization as decisions are made over the next 12 months," said Mr. Zafirovski.
