Nortel Slides After Forecasting Deep Shortfall

Updated from 4:23 p.m. EST:

Nortel (NT Quote) 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. ...