Nortel: Revenues stabilize, but still off 37 per cent from '08 levels

The company filed for bankruptcy protection from creditors Jan. 14

Nortel Networks CEO Mike Zafirovski today said the equipment maker is beginning to see revenue and cash balance stability, even as the company reported a 37 per cent drop in revenues during the first quarter compared to the same period a year ago.

"Despite the declines we saw this quarter, revenue has stabilized and our cash balance is stable from year-end 2008," Zafirovski said in a statement.

First quarter revenues totaled US$1.73 billion, compared to $2.76 billion in the first quarter of 2008. Zafirovski blamed the global economic downturn and Nortel's filings for creditor protection in the U.S. and Canada for the drop.

Nortel's cash balance was US$2.48 billion at the end of the quarter, a slight increase from the end of the previous quarter when it had $2.4 billion.

Nortel filed for protection from creditors on Jan. 14, and despite questions in recent months about the company's restructuring plans, Zafirowski offered no details.

"Discussions are taking place with various external parties; however decisions have not been taken and we continue to evaluate the restructuring alternatives," he said.

Zafirowski also said that Nortel is taking appropriate steps to create separate stand-alone businesses from its current operations.

"We have made the necessary structure decisions to give Nortel the ability to optimize value and preserve innovation platkorms and employment to the greatest exptent possible," he said in the statement.

"Our businesses will have the opportunity to more effectively serve the discrete needs of their respective customers and market segments, while maintaining high customer service and network performance levels."

Analysts have been concerned about how Nortel's largest customers might react to the creditor protection filings, and how their products would be repaired and serviced should Nortel's structure change.

Zafirowski gave some insight about breaking up business units into separate standalone entities, saying Nortel plans to decentralize is carrier sales and global operations functions in coming weeks to enhance the units' "overall responsiveness to [changing] customer and market requirements and provide the opportunity to better serve customers."

As for today's earnings report, one analyst, Jack Gold, said that breaking up Nortel business units doesn't help customers, since the largest will want a sizable support organization.

"I don't think splitting up helps that much," said Gold, an analyst at J.Gold Associates.

Gold said anytime a firm falls into trouble, customers worry about what could happen if the company changes and support is reduced.

He suggested an overseas company could buy Nortel and split up its units, but he said any potential buyer is probably waiting until the cost of doing so diminishes further.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags nortelfinancial results

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Matt Hamblen

Computerworld (US)
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?