In an announcement late yesterday, Nortel Networks Corp. warned that its first-quarter earnings would likely be even worse than forecast last month and said it would cut another 5,000 jobs.
The company said it now expects a first-quarter loss of between 10 cents and 12 cents per share, compared with the anticipated first-quarter loss of 4 cents per share it announced Feb. 15. Nortel said revenue for the quarter would be between US$6.1 billion and $6.2 billion, only slightly lower than the $6.3 billion in its February forecast.
Last year, Nortel reported first-quarter earnings of 23 cents per share on revenue of $6.32 billion.
Nortel said it plans to eliminate the 5,000 jobs by midyear to help mitigate its financial woes. That's in addition to the 10,000 job cuts the company announced just last month. In its statement yesterday, Nortel noted it didn't expect the February cuts to provide any relief for the company's bottom line until the second quarter of this year.
Like many companies, Nortel is finding it difficult to see through the current economic fog.
Nortel President and CEO John Roth said, "We continue to feel the impact of the economic downturn in the United States and are now seeing customers globally assess its effect on their businesses. Given the poor visibility into the duration and breadth of the economic downturn and its impact on the overall market growth in 2001, it is not possible to provide meaningful guidance for the company's financial performance for the full year 2001."
According to analysts, both Nortel and one of its prime competitors, Cisco Systems Inc. in San Jose, are saddled with large inventories in an economic environment in which large corporations have put a hold on IT spending.