NEW YORK-Following the dark hue in the wireless telecom business, Nortel Networks did not strike any optimistic notes as it reported a second-quarter net loss of $697 million, or 20 cents a share, suffering a revenue drop of 40 percent to $2.77 billion.
The company posted a net loss of $19.4 billion a year earlier, or $6.08 a share on revenue of $4.61 billion on a raft of charges.
“I’m pleased with the progress we have made amidst the challenging industry contraction,” said Frank Dunn, the company’s chief executive officer. “Our actions this quarter have solidified our balance sheet while we continued to make significant progress in repositioning our business model and addressing our priorities.”
The company’s $2.77 billion sales fellow slightly below the average market expectation of $2.8 billion.
On the operational level, the vendor had a loss of $323 million, or 9 cents per share, compared with a loss of $1.55 billion, or 48 cents per share in the same quarter last year.
Nortel, however, said it increased its cash reserves to $4.9 billion as against $3.1 billion in the previous quarter. This can be attributed partly to the $1.5 billion cushion it reaped from its equity offerings.
The company said it generated revenue of $5.68 billion for the first half of the year, compared with $10.36 billion for the same period last year. Its net loss was $1.54 billion, or 46 cents a share as against $22 billion, or 6 cents a share, last year.
The company’s reduced losses may in part be due to massive cuts, including layoffs. The company plans to cut 3,500 more positions by September.
The company’s woes began last year after dozens of class-action lawsuits were filed against it for insider trading, and the litigation has driven down its share value drastically. Dunn said the company will “actively review” its cost structure, hinting that Nortel may “reduce or redirect costs that are not warranted.”
“Going forward, we expect there will be ongoing pressure on customer capital spending well into 2003,” said Dunn, although the company expects the third quarter to be similar to the second-quarter earnings result.