Business and Capital Market Analysis !!!

Canadian network solutions company Nortel Networks Corp. (NT: News ,NT.TO: News ) Monday reported a loss in the third quarter, hurt mainly by a non-cash charge of US$3.21 billion to write-down goodwill and deferred tax asset. The company also said it plans to cut about 1,300 positions under its 2009 restructuring plan.

In addition, the company's principal operating subsidiary Nortel Networks Ltd. has decided to suspend the declaration of preferred share dividends. Moving forward, Nortel updated its fiscal 2008 revenue decline forecast in light of challenging environment and stronger U.S. currency.

On a GAAP basis, the company reported a net loss of US$3.41 billion, or US$6.85 per share, compared with a profit of US$27 million, or US$0.05 per share, last year. For the second quarter, the company's net loss was US$113 million, or US$0.23 per share.

The latest quarter's results included an increase in the valuation allowance against deferred tax assets of US$2.07 billion, a goodwill write-off of US$1.14 billion, special restructuring charges of US$50 million and an asset sale gain of US$6 million. Also included in the recent quarter results were a foreign exchange rate related loss of US$7 million, a mark-to-market gains on interest rate swaps of US$2 million, M&A related costs of US$9 million, an investment sale gain of US$7 million and a money market investment loss of US$10 million.

On average, 19 analysts polled by First Call/Thomson financial expected a loss of US$0.30 per share for the quarter. Analysts' estimates typically exclude special items.

Quarterly total revenues declined to US$2.32 billion from US$2.71 billion in the year-ago quarter. Analysts were looking for third-quarter revenues of US$2.31 billion. For the second quarter, the company's revenues were U$2.62 billion.


Source :
1. Nortel posts US$3.41 bln loss in Q3; to axe 1,300 jobs - update 11/10/2008 10:34 AM ET