In an announcement with possible implications for its job layoffs, plant closings and investors, Nortel Networks Ltd. said it is undertaking a comprehensive review of its financial profile for the past three and half fiscal years.
Unlike the recent trend of overstating incomes, Nortel said it overstated its losses. Although this review is by no means complete, the company said approximately $900 million in losses were charged in error.
“It is clear now that in such a volatile environment, errors were made,” said Frank Dunn, chief executive officer of Nortel. “I want to assure Nortel Networks stakeholders that we are committed to working to identify the causes of the mistakes and to implement the appropriate measures to ensure that the problems do not recur in the future.”
During the 2000-2003 period, Nortel represented one of the major telecom companies that bled financially and undertook a series of cost-cutting measures that entailed slashing its work force in about half and its facilities to about 250 from 700, as well canceling perks such as first-class travel for its executives.
“The comprehensive review has been undertaken across all of our businesses and geographic regions,” said Doug Beatty, chief financial officer at Nortel.
In view of the review, its third-quarter results are preliminary, according to the company. It recorded a net income of $179 million, or 4 cents per share. Its revenues were $2.27 billion. For its wireless networks, its revenues were $1.01 billion, while its enterprises segment had $579 million in revenues.
The company emphasized its inroads in UMTS and CDMA2000 contracts and data worldwide.
“The preliminary results announced today reflect our continued progress in an environment of cautious capital spending by our customers,” said Dunn.
