It is terrible for Ottawa economy. It may be helpful for the stock price.
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Nortel Networks comments on Q2 outlook,
announces plans to strengthen overall position
29-MAY-2002
Reconfirms Q2 2002 guidance for sequential improvement in pro forma net loss
from continuing operations compared to Q1 2002
Q2 2002 revenues expected to be flat to down 5 percent from Q1 2002
Plans to further realign Optical Long Haul business, including optical components,
to current market conditions
Targeting a break even cost structure based on quarterly revenues of US$3.2
billion to be in place by Q4 2002
Considering opportunities to raise capital to strengthen balance sheet and
liquidity
TORONTO ?Nortel Networks Corporation today reconfirmed its expectation for improved
pro forma net loss from continuing operations performance in the second quarter of 2002
compared to first quarter of 2002.
The company said it now expects revenues in the second quarter of 2002 to be flat to down
5 percent, compared to the first quarter of 2002, updating its previous sequential revenue
guidance of "not significantly up or down."
Nortel Networks also announced plans to further realign its Optical Long Haul business,
including optical components, to the current market conditions given that it does not expect
a meaningful recovery in the long haul optical market before late 2003 or early 2004.
The company plans to streamline the business and focus on the capabilities that will be
required when increased spending in the long haul optical market is expected to resume,
including optical switching (OPTera HDX/DX), next generation photonic transport capabilities
and end-to-end network management and intelligence. The plan includes the potential sale
and/or resizing of the optical components business.
"We are aligning our optical business model to where we see the industry going to ensure
we are well positioned when spending resumes," said Frank Dunn, president and chief
executive officer, Nortel Networks. "Optical backbone networks are the foundation of
multimedia broadband networks and we expect Nortel Networks to remain an industry
leading provider of end-to-end optical networking solutions. Going forward, we will focus on
our leadership in optical systems and work with our partners to ensure ready access to
high performance, low cost optical components."
Dunn added, "Our focus is to bring all of our business units into a profitable position at the
current market levels. These actions help to do that and will reduce our overall break even
cost structure to approximately US$3.2 billion of quarterly revenues (not including costs
related to acquisitions and any special charges or gains), down from the previous target of
approximately US$3.5 billion.
"We expect this cost structure to be in place by the fourth quarter of 2002. We also
continue to work closely with our customers and are seeing excellent acceptance of our
market leading solutions, even in this difficult market, particularly in next generation
wireless networks, enterprise solutions, metro optical and voice over packet," Dunn said.
The realignment of the Optical Long Haul business, including optical components, is
expected to be completed by the end of the third quarter of 2002 and is intended to impact
approximately 3,500 related positions.
Nortel Networks plans to record charges of approximately US$600 million, the majority of
which is expected to be recorded in the second and third quarters of 2002. The cash
component of this charge is expected to be up to US$200 million. These charges are
incremental to the expected charge of approximately US$150 million to be taken in the
second quarter of 2002 related to previously announced workforce reductions.
The company noted that, taking into account these announced plans, it has sufficient
liquidity to fund these actions and its operations, and expects to be in compliance with its
covenants under various bank facilities, all of which are undrawn. To further strengthen its
balance sheet and supplement its liquidity, the company continues to consider
opportunities to raise additional capital and may pursue an equity-based financing
transaction as market conditions permit.
Taking into consideration changes to previously anticipated divestiture plans and the
completion of today's announced actions, some of which were considered in its previous
headcount target estimate of 44,000, the company now expects a workforce of
approximately 42,000. Going forward, Nortel Networks will continue to monitor the market
and adjust its business model, as appropriate, in its drive to return to profitability in the
near term.
=========================================
Nortel Networks comments on Q2 outlook,
announces plans to strengthen overall position
29-MAY-2002
Reconfirms Q2 2002 guidance for sequential improvement in pro forma net loss
from continuing operations compared to Q1 2002
Q2 2002 revenues expected to be flat to down 5 percent from Q1 2002
Plans to further realign Optical Long Haul business, including optical components,
to current market conditions
Targeting a break even cost structure based on quarterly revenues of US$3.2
billion to be in place by Q4 2002
Considering opportunities to raise capital to strengthen balance sheet and
liquidity
TORONTO ?Nortel Networks Corporation today reconfirmed its expectation for improved
pro forma net loss from continuing operations performance in the second quarter of 2002
compared to first quarter of 2002.
The company said it now expects revenues in the second quarter of 2002 to be flat to down
5 percent, compared to the first quarter of 2002, updating its previous sequential revenue
guidance of "not significantly up or down."
Nortel Networks also announced plans to further realign its Optical Long Haul business,
including optical components, to the current market conditions given that it does not expect
a meaningful recovery in the long haul optical market before late 2003 or early 2004.
The company plans to streamline the business and focus on the capabilities that will be
required when increased spending in the long haul optical market is expected to resume,
including optical switching (OPTera HDX/DX), next generation photonic transport capabilities
and end-to-end network management and intelligence. The plan includes the potential sale
and/or resizing of the optical components business.
"We are aligning our optical business model to where we see the industry going to ensure
we are well positioned when spending resumes," said Frank Dunn, president and chief
executive officer, Nortel Networks. "Optical backbone networks are the foundation of
multimedia broadband networks and we expect Nortel Networks to remain an industry
leading provider of end-to-end optical networking solutions. Going forward, we will focus on
our leadership in optical systems and work with our partners to ensure ready access to
high performance, low cost optical components."
Dunn added, "Our focus is to bring all of our business units into a profitable position at the
current market levels. These actions help to do that and will reduce our overall break even
cost structure to approximately US$3.2 billion of quarterly revenues (not including costs
related to acquisitions and any special charges or gains), down from the previous target of
approximately US$3.5 billion.
"We expect this cost structure to be in place by the fourth quarter of 2002. We also
continue to work closely with our customers and are seeing excellent acceptance of our
market leading solutions, even in this difficult market, particularly in next generation
wireless networks, enterprise solutions, metro optical and voice over packet," Dunn said.
The realignment of the Optical Long Haul business, including optical components, is
expected to be completed by the end of the third quarter of 2002 and is intended to impact
approximately 3,500 related positions.
Nortel Networks plans to record charges of approximately US$600 million, the majority of
which is expected to be recorded in the second and third quarters of 2002. The cash
component of this charge is expected to be up to US$200 million. These charges are
incremental to the expected charge of approximately US$150 million to be taken in the
second quarter of 2002 related to previously announced workforce reductions.
The company noted that, taking into account these announced plans, it has sufficient
liquidity to fund these actions and its operations, and expects to be in compliance with its
covenants under various bank facilities, all of which are undrawn. To further strengthen its
balance sheet and supplement its liquidity, the company continues to consider
opportunities to raise additional capital and may pursue an equity-based financing
transaction as market conditions permit.
Taking into consideration changes to previously anticipated divestiture plans and the
completion of today's announced actions, some of which were considered in its previous
headcount target estimate of 44,000, the company now expects a workforce of
approximately 42,000. Going forward, Nortel Networks will continue to monitor the market
and adjust its business model, as appropriate, in its drive to return to profitability in the
near term.
