Nortel Networks Corp. beat analysts’ expectations and demonstrated its continued financial growth, reporting $7.82 billion in revenues for the second quarter ended June 30, a 48-percent increase from the $5.28 billion reported for second-quarter 1999.
The company reported a net loss of $745 million, or 26 cents per share, compared with a net loss of $258 million, or 10 cents per share, reported for the same time the previous year.
John Roth, president and chief executive officer of Nortel, said the company made significant strides in its wireless Internet business during the quarter, and it was selected as the principal supplier of BT Cellnet’s third-generation wireless network.
Several analysts immediately lifted their 12-month stock target prices, including Tom Astle of Merrill Lynch Co., who increased Nortel’s 12-month stock target price from $85 to $110 and its earnings per share from 67 cents to 72 cents for this year.
Greg Geiling of JP Morgan Securities Inc. said in his report following Nortel’s earnings announcement, “We believe the company is executing flawlessly to capitalize on the growth and demand across its carrier business lines. Given the strong progress Nortel has shown in optical networking, wireless and access, we believe our new 2001 estimates remain conservative and will continue to be aggressive buyers of NT shares.”
Geiling raised his 18-month price target from $90 to $125.
Frank Dunn, Nortel’s chief financial officer, predicted accelerated growth for the company.
“We expect to continue to grow significantly faster than the market growth rate of 20 to 21 percent, with anticipated growth in revenues and EPS from operations in the 30 to 35 percent range,” Dunn said.
The company faltered slightly, however, when talks to sell its fiber-optics parts unit to Corning Inc. were called off last Thursday. Following the news, Nortel’s shares fell nearly 5 percent from $83.87 per share to $79.81 on the New York Stock Exchange, and failed to recover, falling $1.06 more to close at $78.75.
