Nortel stock surges on positive Q3

Nortel Networks Corp. stock jumped 18% to $19.40 yesterday when the infrastructure vendor reported earnings of $27 million during the third quarter, up from the $63 million it lost in the year-ago period. The stock leveled off this morning at around $18.82 per share.
Nortel brought in $2.7 billion in revenue for the quarter, a slight decline from the $2.93 billion it brought in the previous year. The company also failed to meet certain CDMA customer orders, comprising $45 million in total lost revenue, while its manufacturing center was relocated.
Nortel also said it finally reached a settlement on all issues with the Securities and Exchange Commission regarding past financial reporting. The company associated a $35 million cost with those discussions.
Last March, four former executives were charged with repeatedly engaging in accounting fraud to bridge gaps between the network-equipment maker’s true performance, its internal targets and Wall Street expectations. The financial troubles besetting the company seemed to hit a head the previous month when its CFO left the company after a slew of problems were made public.
The Toronto-based company failed to accurately report financial reports for any year in the current decade, which led to various financial restatements with the SEC.
But the company appears to finally be making a turnaround.
“Nortel achieved solid results this quarter in a challenging business environment. We delivered operating margin of 5%, the highest since 2004, driven by the highest gross margin in nine quarters,” President and CEO Mike Zafirovski said. “With an ongoing focus on customers and execution, we expect to continue to deliver operational and financial improvements in the fourth quarter and beyond.”
Nortel also announced the appointment of Pavi Binning as executive VP and CFO, Joel Hackney as president of enterprise solutions and Joe Flanagan as senior VP of global operations.