Nortel stock plunges on outlook

Nortel Networks Corp.’s stock plunged nearly 15% after the infrastructure provider released relatively flat second quarter results, but warned of future instability in the U.S. market.
The Toronto-based company posted Q2 revenue of $2.62 billion, a 2% increase year-over-year. Of the total revenue, just over $1 billion was derived from carrier networks, a 2% drop from the year-ago quarter and a 15% drop from the first quarter of this year.
Nortel said carrier revenues benefited from its joint venture with LG Electronics Co. Ltd., but was offset by a decline in CDMA and legacy switching sales. Competitor Alcatel-Lucent reporter similar struggles in the CDMA market earlier this week.
Net losses increased from $37 million during the second quarter of 2007 to $113 million this year.
UBS Investment Research said it was impressed with some of the company’s numbers, but also stated Nortel is undergoing a massive restructuring under a largely new executive management team with ambitious cost-saving goals, which may prove to be a challenge for the vendor.