Nortel Numbers Face Yet Another Delay

Nortel (NT) suffered another setback on its march to accountability Thursday, warning that it will need an additional month to complete its audit and file restated financials.

Investors didn't exactly welcome the latest twist in Nortel's tangled accounting scandal, which has dragged on now for the bulk of 2004. Shares of the Brampton, Ontario, telecom-equipment maker fell 3% to $3.78 in early trading.

The company says the volume and complexity of work involved with its book-cleaning efforts will cause it to miss its Sept. 30 deadline for filing financial statements for 2003 and the first half of 2004. Nortel now expects it will have the work complete by the end of October.

"Notwithstanding the delay in the expected filing of our financial statements, we have made substantial progress to date and continue to dedicate all necessary resources and work closely with our external auditors to complete the financial statements as soon as possible in October," CEO Bill Owens said in a press release Thursday.

The filing delay puts Nortel in violation of some lending agreements. But the company says it is seeking another waiver from Export Development Canada, for some of the defaults caused by the filing delay. EDC, which has extended Nortel a $750 million line of credit, had previously granted the company a waiver allowing the company to file its financials with the Securities and Exchange Commission on Sept. 30.

Nortel says there are no assurances it will receive the waiver. The company also said it may apply to the Ontario Superior Court of Justice for an extension to hold its 2004 annual meeting after the end of the year, if necessary.

Last month, Nortel fired an additional seven executives for their role in fluffing up the company's earnings, bringing the toll in the book-cooking scheme to 10. Nortel also announced that it would cut 10% of its companywide staff as it attempts to align costs with sales.