Nortel Networks: revenues down, profits down, share price down

Canadian equipment vendor Nortel Networks has reported a 7% fall to USD2.18 billion in third quarter revenue compared to the same period twelve months previously. Net income for the three months to 31 December 2004 slumped from a profit of USD131 million to a loss of USD259 million, while the share price dropped more than 5% on the back of the news. The poor figures are thought to be a sign that Nortel’s accounting woes are finally taking their toll, both in terms of impacting customer interest as well as requiring the company to perform a ‘cumulative correction’ in the quarter for revenues that had previously been recognised in 2001 and 2002. It has already been forced to restate earnings for these years. Rivals Alcatel, Lucent, Cisco and Motorola all reported year-on-year revenue growth for the quarter of between eleven and twelve percent.