Nortel results shed gloomy light on short-term recovery prospects

North American telecoms equipment manufacturer Nortel Networks [NYSE: NT] today announced revenues of USD2.33 billion for the second quarter of 2003, down from USD2.4 billion from the first quarter and USD2.77 billion in the corresponding period of 2002. The vendor’s net loss for the three months stood at USD14 million, a dramatic improvement from the USD697 million loss recorded in June 2002, but this was not enough to instill confidence of a recovery amongst its management. Company CEO Frank Dunn told analysts he was ‘very cautious’ on the outlook for the equipment market over the next six months. One bright note was a 6% rise in revenues from Canada, but this was more than offset by falls of 9% in income from Europe, the Middle East and Africa, and a 5% drop in sales from the US. Despite the recent rumblings of a slow recovery in the beleaguered telecoms infrastructure market, Nortel is just one of many vendors to have recently released results which have failed to meet analysts’ expectations. This week alone has seen Siemens, Lucent Technologies and Corning all post disappointing returns.