Nortel Networks (NYSE: NT) dropped US$2.27 to $14.49 in morning trading Wednesday after the telecom company announced a second set of layoffs and again reduced expectations for first-quarter results.
Analysts at Lehman Brothers and First Union Securities lowered their estimates for Nortel to reflect the company’s latest revised expectations.
“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,” said Nortel president and chief executive officer John Roth. “Reduced and/or deferred capital spending and increased pricing pressure are resulting in lower overall revenues, particularly in the United States.”
Nortel said it expects a loss from operations of 10 to 12 cents per share for the first quarter ending in March, rather than the 4 cents previously expected. Revenue will likely total $6.1 billion to $6.2 billion, below the previously projected $6.3 billion.
“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,” Roth said.
Earlier, the company had projected market growth of about 10 percent this year, saying business was continuing to grow outside the United States.
Nortel said it has “substantially completed” a round of 10,000 layoffs announced on February 15th, but because of market conditions, more are necessary. Nortel said that by midyear, it expects to have reduced headcount by about 15,000 from the total as of year-end 2000.