Nortel warns of U.S. market woes, shares fall
By Wojtek Dabrowski
TORONTO (Reuters) - Nortel Networks Corp NT.TO NT.N said on Friday its quarterly loss tripled on restructuring charges and currency exchange losses, and its shares fell as the telecom equipment company warned that a tough U.S. market is choking wireless spending by carriers.
The loss widened to $113 million, or 23 cents a share, from $37 million, or 7 cents a share, a year earlier. The latest results included $67 million in restructuring charges and a loss of $21 million, primarily from mark-to-market losses on interest rate swaps.
Nortel's stock sank C$1.15, or 14.6 percent, to C$6.70 on the Toronto Stock Exchange. Exactly a year ago, it was at
"The macro environment in the U.S. and the U.S. carrier spend continues to be challenging," Chief Executive Mike Zafirovski told analysts during a conference call. He said this has hurt sales related to CDMA, or Code Division Multiple Access, wireless technology.
This has already started to show up in Nortel's results: its orders fell to $2.15 billion in the quarter from $2.68 billion a year earlier, mostly because of a weaker CDMA market in North America and lower orders from the company's joint-venture with South Korea's LG Electronics.
CDMA is one of several widely-used mobile communications technologies for networks that offer cellphone service.
Edward Snyder, principal analyst at Charter Equity Research, said it could be 2009 before CDMA spending recovers as major U.S. carriers such as Sprint (S.N: Quote) and Verizon (VZ.N: Quote) are clamping down on spending. Continued...