Nortel revenues down 8% in Q2 to USD 2.56 billionNortel reported revenues in the second quarter of USD 2.56 billion, down 8 percent from a year earlier due to the sale of its UMTS business as well as delays to come orders closing. The company recorded a net loss of USD 37 million, versus a profit of USD 342 million a year earlier. The result included a USD 36 million in restructuring charges, a provision of USD 35 million for the ongoing SEC accounting investigation, a forex gain of USD 69 million and USD 10 million from selling assets, while last year’s result was boosted by a gain of USD 510 million related to its shareholder litigation. Nortel’s gross margin improved to 41.1 percent in the quarter, from 38.4 percent a year ago and 40.4 percent in Q1. For the full year, it still targets flat to slightly lower sales and a gross margin in the low 40s. It added a forecast for an annual operating margin of around 5 percent. Nortel expects sequential sales growth to improve in the coming quarters, after 3 percent growth in Q2.
Across the various business lines, carrier networks sales fell 16 percent from a year ago to USD 1.06 billion in the second quarter. Excluding the divested UMTS assets, sales were down 5 percent. Enterprise Solutions reported sales up 23 percent year-on-year to USD 590 million, while global services sales fell 9 percent to USD 494 million. Metro ethernet networks recorded sales of 363 million, down 16 percent.
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The company has gotten itself out of similar situations before, so Nortel may be down, but not necessarily out. The company does seem to be pretty active right now as far as planning their takeovers. I’ve read that it as a pretty good shot at Tellabs, due to some connections between certain executives and board members, but Nokia is also supposed to have its on on Tellabs, so who knows whether that will actually happen. (see NewsVisual article: http://www.newsvisual.com/newsvisual/2007/08/nortel.html).