Nortel Adds to Restatement

Nortel's (NT Quote) latest restatement tab now stands at $1.2 billion.

Updating its progress on the book-cleaning front, the Toronto telecom equipment maker says the additional amount of misaccounted revenue to be restated is $350 million. That amount adds to the $866 million the company previously identified as improperly booked over the past three years.

In October 2003, Nortel's internal audit turned up $900 million worth of accounting mistakes it needed to restate. That discovery launched several investigations into the company's bookkeeping, which later uncovered $3.1 billion in misbooked revenue dating back to 1999.

As a result of the discovery, Nortel says it will miss its first quarter 2006 financial filing deadline. Still, the company expects to have the report complete by June 5. Nortel says it still expects to file its 2005 annual report by the April 30 deadline.

This is Nortel's third round of restatements and filing delays in three years. The company's accounting troubles surfaced three years ago when a surprising swing to profit triggered more than $50 million in executive bonuses. As the bonusgate scandal unfolded, those profits turned out to be bogus and nearly the entire top management team of the company was removed.

Nortel warned two weeks ago that it had discovered more misbooked revenue in its current audit, but did not indicate the dollar value of the latest adjustment.

The accounting mixup has put Nortel in default of a $1.3 billion credit agreement with Export Development Canada. Nortel is seeking a waiver from EDC, which has a history of leniency with the troubled gearmaker.

Nortel shares plunged a penny to $2.80 in late morning trading Friday.