Nortel Q1 results covered in red ink

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Nortel Q1 results covered in red ink

Microscope contributor

Struggling Nortel has blamed the economy for its current woes after posting losses for its first quarter.

The Canadian telco, which filed for bankruptcy earlier this year, reported a 37% drop in revenues to $1.73bn and a net loss of $507m compared to a loss of $138m for the first quarter last year.

Contributing to the numbers was a $59m restructuring charge and a lower level of completed contract business.

There was some better news around the vendor’s drive to control costs with operating expenses dropping by 15% year-on-year.

Drilling down to the individual business units there were reductions across the board with enterprise solutions dropping by 41% to $395m and carrier networks decreasing by 32% year-on-year to $737m.

Nortel’s president and CEO Mike Zafirovski said that it had expected revenues and margins to be down because of the current state of the economy.

He hinted that it was continuing to evaluate the direction of the company as it operated in a creditor protection status in Canada and Chapter 11 in the US.

“Discussions are taking place with various external parties, however, decisions have not been taken and we continue to evaluate our restructuring alternatives. To provide maximum flexibility we are also taking the appropriate steps to complete the move to standalone businesses,” he said.


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