Nortel Networks Corp., one of the world's largest manufacturers of telecommunications equipment, reported on Thursday a first-quarter profit after a string of quarterly losses, showing results of a draconian cost-cutting program that has included cutting its workforce in half.
Nortel posted net income in the first quarter ending March 31 of US$54 million, or US$0.01 per share, compared with a net loss of US$841 million, or US$0.26 per share, in the same period the year before, the company said in a statement.
The consensus estimate from analysts polled by Thomson First Call was for a loss of US$0.03 per share. A Thomson First Call spokesman couldn't clarify whether the consensus estimate is comparable to Nortel's net earnings per share or whether it takes into account any one-time items.
The company's results were boosted by net earnings of US$190 million from the sale of Arris Group Inc. and the settlement of certain trade and customer finance receivables, it said.
But first-quarter revenue at the Brampton, Ontario, manufacturer fell to US$2.4 billion from US$2.9 billion the year before, reflecting ongoing weak demand for its switches and routers. Nortel, like its rivals Lucent Technologies Inc. in Murray Hill, New Jersey, Alcatel SA in Paris and Siemens AG in Munich, has been hard hit by a dramatic drop in spending by network operators that amassed too much network capacity during the Internet boom and a mountain of debt from costly acquisitions and wireless licenses.
On Wednesday, Lucent reported a net loss for the second quarter, ended March 31, of US$553 million compared to US$535 million for the same period a year ago, as sales tumbled 32 percent to US$2.4 billion.
Nortel expects the overall telecom equipment market to be down modestly in 2003, according to the statement. Given the ongoing economic downturn and political uncertainty in some regions of the world, customers will continue to spend cautiously, it said. As a result, Nortel expects capital spending levels in the second quarter of 2003 to be similar to the first quarter of 2003.
Nortel made its announcement before the financial markets opened in New York. Nortel's stock was trading at US$2.64 in mid morning, up 3.12 percent.