Nortel Networks

(NT)

sang a sad song about future earnings Thursday night, and woke up to a flurry of bad reviews from Wall Street's biggest brokerages. A number of analysts downgraded the Canadian networking infrastructure provider while attempting to figure out how big the repercussions will be.

Meanwhile, its shares were down $9.75, or 33%, to $20 on the

New York Stock Exchange

.

On Thursday, 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

First Call/Thomson Financial

. Nortel also said it would cut 4,000 jobs, on top of the 6,000 it has already slashed, by the end of the year.

Friday,

Merrill Lynch

analyst Tom Astle cut the company's intermediate-term rating to accumulate from buy while dropping the 2001 earnings-per-share forecast to 74 cents from 95 cents. Revenue this year is expected to be lower as well, $33 billion from $39 billion, Astle said.

Meanwhile,

Lehman Brothers

cut its price target to $26 from $50 and its 2001 earnings-per-share estimate to 72 cents from 97 cents.

Credit Suisse First Boston

dropped the company to buy from strong buy and cut its price target to $40 from $80. Additionally, it snipped its 2001 earnings-per-share forecast to 65 cents from 95 cents and its 2002 forecast to 85 cents from $1.15.

Goldman Sachs

lowered its 2001 earnings-per-share forecast to 70 cents from 98 cents.

"We thought Q1 would be ugly but this is worse than we thought," Merrill's Astle wrote. "This sector has turned ugly fast. We had sensed sectoral weakness in

the first quarter but we did not expect Nortel to see this much weakness and lack of visibility. Within a three-week period the company has dropped its

first quarter revenue target by 22%."

The Merrill analyst said that the Nortel news reaffirms his already cautious view of the networking equipment sector, especially in the wake of the

Cisco

(CSCO) - Get Report

warning from last week and the utter lack of visibility in most sectors.

"Clearly, or maybe not so clearly, no one's crystal ball is working these days," Astle wrote, surveying the Nortel fallout.

He said that

JDS Uniphase

(JDSU)

might experience some short-term stock weakness, but that its ties to

Ciena

(CIEN) - Get Report

, which unlike Nortel,

announced that business would improve in 2001, could offset the losses due to its sales to Nortel.

Exfo

(EXFO) - Get Report

and

Avanex

(AVNX)

were both in a similar situation, with Nortel representing a 10% chunk of business that may or may not be offset somewhere else. It's worth noting that Exfo has yet to warn, while Avanex was cautious in its comments.

But if you're looking for one company that could get killed by the news, then look no further than

Corning

(GLW) - Get Report

. Fellow Merrill analyst Steven Fox lowered his estimates on Corning, cutting both 2001 earnings and growth forecasts, since Corning's photonics business derives 15% of its revenue stream from Nortel.

"We think it will be difficult for

Corning to grow its photonics business at prior expectations of 75%-90% in 2001," Fox wrote. "We now look for 45% growth to around $1.4 billion. Our previous estimate was $1.7 billion. The company's

new guidance, released this

morning, is for 50% photonics sales growth."