Ailing telecom equipment maker Nortel Networks Corp
Demand for the technology that Nortel produces is continuing to wane as its big customers -- telecom companies and other corporations -- slash or postpone their spending amid the global economic crisis.
This customer reluctance to spend is one of the main reasons Nortel has been unable to dig itself out from a mountain of losses that have accumulated since the technology bubble burst at the start of this decade.
The company filed for bankruptcy protection in January in a bid to try to restructure while keeping creditors at bay.
Nortel, North America's biggest maker of telephone equipment, said it lost $2.14 billion, or $4.28 a share, in the three months ended December 31. In the same period a year earlier it lost $844 million, or $1.70 a share.
Sales swooned 15 percent to $2.72 billion from $3.2 billion.
These results weren't actually as bad as I thought they would be, said Duncan Stewart, an analyst at DSAM Consulting, noting that the revenue decline was roughly in line with expectations.
Analysts expected the company to post revenue of $2.74 billion, according to Reuters Estimates.
Nortel said its results included a $1.24 billion goodwill writedown, as well as a writedown of $951 million to reduce its deferred tax asset.
It also booked $97 million in charges related to its restructuring. Last week it announced another 3,200 job cuts around the world.
The company said it would not provide forecasts due to limited industry visibility, continued global economic uncertainty and work taking place on a comprehensive restructuring plan under Nortel's credit protection filings.
Nortel said there would also be no conference call with management to discuss the results.
In an interview, Chief Executive Mike Zafirovski said the company continues working toward a restructuring plan that will turn the company around.
We're not naive to the challenges facing the industry, he said. But there's lots of resilience, there's lots of know-how within the company.
The company is likely to try to sell entire divisions as it fights to survive, analysts say. It provided no details on any asset sales on Monday and Zafirovski also declined to discuss such moves.
They're sitting at the poker table with some really bad cards, Stewart said, adding he's not surprised Nortel didn't provide more strategic specifics, since doing so could hit the prices that any assets might fetch.
Nortel said that for all of 2008, it lost $5.8 billion, compared with $957 million in losses in 2007.
The company said its fourth-quarter operating expenses were down 30 percent from the previous year as it slashes costs across the board and works on formulating a plan that will pull it out of creditor protection.
It said its gross margin dropped to 40.4 percent from 43.7 percent a year earlier. Operating margin rose to 11 percent from 7.6 percent due to cost cutting.
In an executive change, Nortel said Pavi Binning, chief financial officer, will also take on the duties of chief restructuring officer.
Nortel filed for bankruptcy protection in Canada and the United States on January 14, blaming the economic crisis for derailing a turnaround effort that began in 2005.
It had about $2.4 billion in cash when it sought court protection from its creditors and about $4.5 billion in long-term debt, according to court documents.
The company's shares are almost worthless, and were unchanged at 10.5 Canadian cents on the Toronto Stock Exchange on Monday morning. In mid-2000, at the height of Nortel's success, the stock was worth more than C$1,100, adjusted for a share consolidation that took place in late 2006.
(Reporting by Wojtek Dabrowski; editing by Peter Galloway)