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Nortel to quit metro Ethernet biz as noose tightens

Microscope contributor

Nortel Networks has become the latest tech company to cry foul over the worsening economic climate, after revising its full-year outlook downwards, and has admitted it is seeking to explore a divestiture of its metro Ethernet network (MEN) unit.

Canada-based Nortel’s warning comes just hours after both broadline distributor Ingram Micro and PC vendor Dell issued negative trading statements.

According to CEO Mike Zafirovski, full-year revenues are expected to slip between 2% and 4%, with Q3 revenues coming in at around $2.3bn.

Nortel complained that a decline in capital expenditure among carrier customers had hit harder than expected, and added that deferred IT investments among enterprise and metro Ethernet customers were also starting to bite.

In a statement, Nortel said that since reporting its Q2numbers it had started to see further pressure on revenue due to foreign exchange impact and product delivery delays.

Zafirovski said: “It is clear that the environment in which we operate requires immediate and decisive actions. A comprehensive review of our business is taking place and we are determined to reshape the company to establish a clear path for renewed value.”

He added that the divestiture of the MEN unit would go someway to strengthening Nortel’s flagging balance sheet and funding the anticipated restructuring.


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