Shares in Nortel Networks rallied yesterday despite an announcement by the Canadian networking equipment maker that first-quarter revenues would be lower than expected, while the operating loss was likely to be only slightly larger than forecast.
Industry analysts said the 5 per cent rise in early trading was explained by earlier investor fears that Nortel's results might have been worse.
The company, which employs 1,500 people in Ireland including 1,100 in Belfast, also said it was fully drawing down a $1.75 billion (€1.99 billion) bank facility but stressed it did not immediately need the funds.
Nortel's announcement was the latest indication that the downturn that has plagued telecommunications providers and their equipment suppliers since early last year shows little sign of abating.
The company, one of the world's largest networking equipment suppliers, said first-quarter revenues would be about $2.9 billion this year, a 16 per cent sequential decline. The company had previously said it expected revenues to fall 10 per cent from the fourth quarter last year, but it warned in February that it would be tough to meet that target.
The group's pro forma net loss from continuing operations was 14 US cents per share, compared with analysts' expectations of a 13 US cents per share loss. Mr Frank Dunn, the company's chief executive, attributed the revenue drop to "limited capital expenditures by customers". "Customers were showing more resolve than originally anticipated to minimise spending in the near term," he said.
Nortel will report results on April 18th. - (Financial Times Service)
