New Restatement for Nortel

Nortel (NT), with its third adjustment in two months, has found even more bookkeeping errors, taking its restatement total for the past three years to nearly $1.5 billion.

The Canadian telecom gearmaker also reported an adjusted fourth-quarter bottom line that was worse than its recently lowered guidance, thanks to shrinking gross margins. In a filing with the Securities and Exchange Commission late Friday, Nortel said it lost 2 cents a share, before items, on sales of $2.99 billion in the latest quarter. The company lost 1 cent a share, on a pro forma basis, and had revenue of $2.5 billion in the year-ago period.

Last month, Nortel issued a preliminary fourth-quarter report that called for an adjusted profit of 4 cents, but in the final report, Nortel's gross margin slipped to 39.4% from the 43.3% the company had targeted. Once it factored in various items, including costs of $2.47 billion to settle shareholders lawsuits, Nortel lost $2.30 billion, or 53 cents a share, in the most recent quarter.

The filings also included restated financial reports for the past three years that erased $1.48 billion in sales and cut net income by $531 million. Last month, Nortel had said it would restate its results to eliminate $1.2 billion in misbooked sales.

Investors had hoped Nortel was making progress rebuilding in the wake of accounting scandals and sales slumps. After two restatements and the departure of its top management, Nortel was expected to have turned a corner with Motorola's (MOT) No. 2 executive Mike Zafirovsky at the helm. But the latest adjustment now marks the third round of bookkeeping corrections for the company.

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