This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Nortel Slides After Forecasting Deep Shortfall

Updated from 4:23 p.m. EST:

Nortel (NT) warned Thursday of a sharp earnings and revenue shortfall, saying that the U.S. economic slowdown is "faster and more severe" than it had expected.

The networking equipment company, backing away from hopes of a second-half economic bounceback, also said it didn't expect a significant recovery in the broader economy before the fourth quarter. Nortel stock, which added 20 cents during regular trading to close at $29.75, dropped 16% to $25 in after-hours action on Island.

Nortel forecast a first-quarter operating loss of 4 cents a share on revenue of $6.3 billion. Analysts were expecting the company to earn 16 cents a share on revenue of $8.1 billion, according to numbers quoted by First Call/Thomson Financial.

Nortel also said it would cut an added 4,000 jobs, on top of the 6,000 it has already slashed, by the end of the year in a cost-cutting effort.

The company, which during the second half of 2000 largely resisted the notion that the economy was slowing and that telecom-industry spending was pulling back, said Thursday that "we are now seeing a faster and more severe economic downturn in the U.S. which we now expect will result in a slower overall market growth of approximately 10% in 2001." The company had forecast U.S. market growth of some 30% for the year, though it began to back away from its even-headier growth goals for its key optical networking division last December at its analyst meeting in Boston.

Nortel said that its revised earnings and revenue targets mean it will continue to grow faster than the industry. The company expects earnings to rise 10% for 2001 and revenue to rise 15%. Based on those figures, 2001 earnings should come in at around 81 cents a share on revenue of about $35 billion. The consensus calls for earnings of 96 cents and revenue of $39 billion.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,987.51 -61.49 -0.36%
S&P 500 1,985.54 -11.91 -0.60%
NASDAQ 4,567.5980 -24.2080 -0.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs