Nortel Q4, 2002 results beat Wall St. predictions

Nortel Networks this week posted fourth quarter and year end 2002 results that were far better than analyst expectations.

Nortel this week posted fourth quarter and year end 2002 results that were far better than analyst expectations.

For the three month period ended Dec. 31, 2002, Nortel recorded revenue of $2.52 billion – slightly higher than analyst expectations of $2.4 billion – and a pro forma loss of $0.01 per share, five cents better than analyst estimates of a $0.06 per share loss. For the same period a year ago, Nortel recorded revenue of $3.46 billion and a loss of $.57 per share.

On a sequential basis, fourth quarter revenue was up 7% from the $2.36 billion in sales Nortel posted for the period ended Sept. 30, 2002. Pro forma net loss for Q3 was $0.10 per share.

For the year 2002, revenues were $10.56 billion compared to $17.51 billion for 2001. Nortel’s pro forma net loss was $0.33 per share, compared to a pro forma net loss of $1.41 per share for 2001.

Analysts were expecting revenue of $10.4 billion and a pro forma loss of $.38 per share for 2002.

“Our overall revenues were up sequentially across all of our lines of business and geographic regions,” Nortel President and CEO Frank Dunn said. “We have now stabilized our business model and ended the year with a very strong cash balance.”

Compared to the third quarter of 2002, Nortel’s Wireless Networks business unit revenue increased 8%. Enterprise Networks revenue was up 6%, Wireline Networks grew 5% and Optical Networks jumped 11%.

But compared to the fourth quarter of 2001, Wireless Networks revenues decreased 16%, Enterprise Networks dropped 18%, Wireline Networks declined 45%, and Optical Networks revenues were down 26%.

Geographic revenue for the fourth quarter of 2002 compared to third quarter increased 3% in the U.S., 9% in Europe, Middle East and Africa (EMEA), 28% in Canada, and 9% in all other regions. Compared to the fourth quarter of 2001, revenue decreased 29% in the U.S., 21% in EMEA, 41% in Canada, and 25% in all other regions.

Entering 2003, Nortel expects revenue for the first quarter of 2003 to decline from Q4 2002 due to a modest drop in the overall market next year, and seasonality. Nortel continues to expect to achieve pro forma profitability by the second quarter of 2003.

“The environment is more stabilized,” Dunn says, “but I’m cautious.” If there’s an increase in carrier capital spending this year it will be modest, and it won’t occur until the second half of 2003, he says.

Nortel says the bulk of its restructuring is over, and that it expects to have 36,000 employees at the end of Q1 2003 instead of the 35,000 previously estimated.