Ontario-based equipment vendor Nortel Networks is restating its financial results for 2000, 2001, 2002 and for the first half of 2003 in a move aimed at both correcting millions of dollars of accounting errors by reducing previously reported net losses, and increasing shareholders’ equity and net assets. Preliminary indications suggest that the restatement, which follows a previous initiative to review assets and debts, will remove USD900 million worth of liabilities, partly offset by a reduction of around USD160 million in net deferred income taxes. Nortel CEO Frank Dunn, the former CFO who presided over its fiscal affairs throughout 2000 and most of 2001, said that he would stridently pursue an investigation into how the errors occurred saying ‘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’.
Nortel’s announcement coincides with its release of preliminary financial data for the three months to 30 September 2003, showing that the equipment manufacturer returned a small profit of USD179 million, or USD0.04 per share, to beat analysts’ forecasts of zero cents per share. However, the company’s revenue figure of USD2.27 billion was below market expectations of USD2.33 billion. Mr Dunn commented that ‘the preliminary results announced today reflect our continued progress in an environment of cautious capital spending by our customers’. Nortel’s return to profit follows the example set by Lucent Technologies earlier this week, which posted its first quarterly profit in over three years.