Nortel issues another gloomy forecast

Canadian equipment vendor Nortel Networks said yesterday that it expected its third quarter revenues would be below those of the second quarter, thus reversing an upbeat earnings forecast it issued only a month ago. The company, which is currently in the throes of restating its financial returns dating back to 2001, said it expected sales for the full year to grow by around 5%, but that it predicts the equipment supply market as a whole to grow faster than that. This marks a reversal from last month’s announcement when Nortel said it expected its 2004 revenue growth to outpace the rest of the market. Stiff competition in the broadband wireless equipment market, coupled with the effects of internal restructuring and a management shake-up are thought to be the main reasons behind the latest glitch in Nortel’s recovery from the telecoms market downturn. Its shares fell 8% yesterday, to close at USD3.50 on the NYSE.