New Headaches at Nortel

For 2006, Nortel said it expects "revenue momentum in the second half," resulting in mid- to high-single digit growth for the full year 2006 compared to 2005. It expects gross margin to be in the "low 40s" as a percentage of revenue and operating expenses to be essentially flat compared to 2005.

Regarding the restatement, Nortel said it won't be able to file its 2005 Form 10-K by March 16 and, absent a waiver, a default will occur under its $1.3 billion one-year credit facility. That could result in lenders accelerating repayment terms and trigger other default events.

"Nortel will request a temporary waiver from the lenders while Nortel completes its filing obligations. There can be no assurance that Nortel will receive such a waiver."

The stock fell 8 cents, or 2.6%, to $3.01.

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