Like an unquiet ghost, Nortel Networks Ltd.’s financial woes keep haunting its other pursuits.
Since its financial inconsistencies snagged the spotlight, its contract wins and technology strides have been shadowed by new revelations regarding its accounting errors.
When it was not a new firing, it was a new investigation. When a new regulatory body was not asking an accounting question, a set of investors were filing a class-action lawsuit. All of these cast a pall on the company’s good news like contract wins or technology strides.
The accounting ghost was awakened again. Less than a week after Nortel launched a media blitz to boost its image, it postponed yet again the release of its financial statements, underlining the company’s challenges to steer out of the crisis that has taken its toll in high-level firings and a restructuring.
The company had planned to release the statements at the end of October. The company said Thursday it is targeting 30 to 60 days for the release, which may lead into next year.
The company denies the campaign was intended to deflect attention from its financial stumbles. “I would separate it from the financial statements,” said Tina Warren, spokeswoman for the company.
The media campaign themed, “This is the Way. This is Nortel,” is designed to give the company a new look, feel and voice.
“Today we’re confirming that marketing is now a strategic asset for Nortel, vital to growing our market momentum by helping us reach customers and prospects about the value we can bring to the world’s most critical communications,” said Bill Owens, president and chief executive officer of the company.
“It’s a new day for Nortel,” exhaled Clent Richardson, chief marketing officer for the company. He was appointed as a key figure in the company’s restructuring announced Aug. 19 and is heading the global branding initiative.
Yet a few days later, the company had to battle its recurring postponements of its financial restatement.
“As we near the end of the restatement process, we understand it is difficult for many of our stakeholders to comprehend the scope and complexity of the task we have undertaken,” said Owens. “The challenges of reviewing and verifying hundreds of thousands of documents and communications and related accounting entries over multiple fiscal periods have been monumental.”
Nortel is working to release the statements covering each of the fiscal quarters of 2003, 2002 and 2001 as well as the first and second quarters of 2004. It also explained that it will release its unaudited statements for the third quarter of 2004 “as soon as practicable.”
The company said its findings so far included a net reduction in revenue of about $600 million and $2.5 billion in 1999 and 2000 respectively. It explained that it will permanently reverse the 2000 figure by about $250 million. It, however, noted that it will enjoy a net increase in revenues of about $1.35 billion, $450 million and $450 million in 2001, 2002 and 2003, respectively.
As at Sept. 30, 2004, the company said it reported cash of about $3.4 billion.
Nortel said it had gains in its wireless business in GSM, UMTS and Voice over Internet Protocol technologies in 2004 compared with 2003.
With its global branding campaign, the company hopes to redefine Nortel. It plans to advertise on television and other media, changing discussion from “the network” to what people “do with the network.”
Nortel said its TV spot will show a noisy stock exchange floor, high-rise office buildings and security department switchboard operators against the background of a familiar tune sung by a children’s chorus.
Warren said the campaign will cover three areas. They include what Nortel calls enhancing human experience through broadband tele-medicine solutions; igniting and powering global commerce using institutions like stock exchanges and centers of commerce as well as focusing on rural and underdeveloped parts of the world; and securing and protecting the world’s most critical information. “Frankly, people will be surprised when they learn the tremendous impact Nortel is making every day around the world,” said Richardson.
