Nortel Networks Ltd. shares dropped on news the company will not release its quarterly and yearly results as it promised. Meanwhile, Alcatel Alsthom unveiled what it regarded as a strong outing for the third quarter.
Nortel put off releasing its results to mid-November. The company’s financials are expected to cover all of 2003 as well as the first and second quarters of 2004.
“This delay in our timeline for completing the restatement process was a very difficult decision,” said Bill Owens, president and chief executive officer of Nortel. “We have made great progress toward completion, have continued to devote massive resources to the restatement effort and are confident that we are very close to the end of this critical chapter.”
The company’s stock dropped 3.8 percent, or 13 cents, to $3.26 on the news.
Although it promised results would be unveiled in November, Nortel noted its “expectation as to timing of events is subject to change.”
Nortel said it expects its revenue to increase about 7 percent from previously announced figures for 2001, 1 percent in 2002 and 3 percent in 2003. However, Nortel expects to report a 50-percent drop from its previously announced net earnings for 2003, which will impact net earnings for 2001 and 2002. The company did not refer to the third quarter of 2004, nor did Nortel release specific dollar amounts.
While the net earnings reduction will affect Nortel’s existing and discontinued operations, it will not impact its cash balance as of December 2003, said the company.
The company has been in the middle of a financial crisis that led to the removal of its former CEO and other principal officers and triggered not only internal audits, but also an investigation by the Securities and Exchange Commission and a series of class-action lawsuits, which have been consolidated.
Alcatel witnessed improved sales for the third quarter, although its net income was low compared with the same period a year ago. Alcatel’s mobile infrastructure business also bounced up in sales from last year.
The company’s net sales stood at $3.8 billion for the third quarter, a 3-percent increase from $3.4 billion in the year-ago period. In the second quarter, the figure was $3.6 billion.
Income from operations totaled $345.7 million compared with $219 million a year ago. The company’s net income was $107 million, a sharp drop from the year-ago figure of $362 million, although it improved sequentially as it had a net income of $29 million in the previous quarter.
In its mobile business, Alcatel reported revenues of $1.14 billion compared with $889 million in the same quarter last year, citing accelerated demand for products across all business lines. Income, however, fell to $131.3 million for the quarter from the figure of $136 million in the third quarter of 2003.
“Alcatel registered a solid performance in the third quarter,” said Serge Tchuruk, chairman and CEO of the company. “In a competitive environment, our current business model involves substantial investments in business development, which are directed where potential is clearly attractive to Alcatel and where market buildup costs remain compatible with our gross margin target of around 38 percent for the full year 2004.”
The company said its second- and 2.5-generation products have acquired much momentum in the emerging economies of India, Russia and China, while its third-generation offerings have enjoyed demands in Austria and Portugal. Alcatel has discontinued its handset business.
