TORONTO—In its bi-weekly financial status update, which is required by the Ontario Securities Commission, Nortel Networks Ltd. warned its first-quarter revenues will be equal to or lower than its year-ago results.
Commenting on the company’s financial expectations, Peter Currie, executive vice president and chief financial officer of Nortel, said, “We expect strong revenue momentum for the rest of 2006, resulting in high single-digit growth for the full year 2006 compared to 2005. For the full year, we expect gross margin to be around 40 percent as a percentage of revenue and operating expenses to be flat to up slightly from 2005, with foreign exchange and growth related expenses offsetting productivity and efficiencies. For the first quarter of 2006, we expect revenues to be flat to down slightly and a slightly higher loss compared to the first quarter of 2005.”
Nortel reported 2005 first-quarter net losses of $49 million from $2.53 billion in revenue.
Nortel said it expects to file its first-quarter 2006 results no later than the week of June 5. The company’s next bi-weekly status update is scheduled for the week of May 29.
In late March, the company was directed by the OSC to provide bi-weekly updates of its financial position as a result of its delay in filing its 2005 annual reports and corresponding Canadian filings. The company has restated its financials four times within three years, prompting the OSC to issue a cease trade order that forbids current and former directors, officers and employees of Nortel from trading shares of the company’s stock.
The order was another setback for Nortel as the equipment vendor struggles to settle lawsuits, firm up its accounting standards and reorganize its product lines to better suit the market.
In February, Nortel agreed to pay $2.4 billion to settle shareholder lawsuits stemming from its accounting scandals. Then, in late April the company restated its much delayed financial results for 2003, 2004 and the first nine months of 2005, adjusting its revenue by a total of $1.5 billion.
