Nortel reports $19.4 billion loss in Q2

Nortel suffered a quarterly net loss of $19.4 billion and a pro forma net loss on continuing operations of $1.55 billion based on revenue from continuing operations of $4.61 billion in the second quarter of 2001, the company said Thursday.

On a per-share basis, the net loss from continuing operations for the quarter ended June 30 was $0.48, and the company does not expect its financial situation to show any signs of improvement until the second half of next year, Nortel said in a statement.

Nortel in the second quarter also took a one-time charge of $12.3 billion (after tax) for the writedown of intangible assets, the company said. Nortel blamed its bleak financial report, the second largest loss in its history, on a continued lack of demand for networking equipment.

The losses were in line with the forecast Nortel released last month along with an announcement that it was to cut an additional 10,000 employees from its work rolls, adding to the 20,000 in job cuts it announced earlier this year. In June, the company forecasted a net loss of around $19.2 billion, with a net loss on operations of $1.5 billion and revenue from continuing operations of $4.5 billion.

Of the 30,000 employees who are to lose their jobs, 23,000 have already been laid off and 7,000 can expect to be made redundant within the next eight weeks, Nortel said.

The company believes it will be able to save approximately $1 billion before taxes per quarter as a result of the job reductions and other measures it is taking to streamline operations, such as closing down some facilities, Nortel said.

Revenue in its network infrastructure division dropped 39% in the second quarter of 2001 compared to the second quarter of 2000. Revenue for wireless Internet products fell sharply in Europe and Latin America, but was offset by growth in Asia and the U.S., Nortel said.

In an effort to recover, Nortel will now focus its business over the next several quarters on next-generation solutions in optical switching, metro optical, IP networking, 3G wireless infrastructure and IP services solutions for carriers and enterprises, the company said.

The IDG News Service is a Network World affiliate.

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