Nortel Networks

(NT)

met Wall Street's earnings expectations and slightly exceeded consensus revenue growth but confirmed investor concerns about the emerging slowdown in near-term growth for the networking sector.

The maker of networking gear said fourth-quarter earnings were 26 cents a share, inline with analysts' estimates according to

First Call/Thompson Financial

. Fourth-quarter revenue was $8.8 billion, up 34% over the $7 billion a year ago.

For the year, Nortel said net profits from operations were $2.31, or 74 cents per share, an increase of 42% over the 52 cents per share for 1999. Revenues for the year were up $9 billion, or 42% to $30.3 billion, over the $22.22 billion in sales in 1999.

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Nortel shares were up slightly to $37 in after hours trading on

Island

shortly after the earning were released Thursday after the market closed. During regular trading, Nortel was up $1.94, or 5.6%, to $36.69.

The company guided down growth expectations slightly for the first quarter and the remainder of the year. Nortel says revenue growth will be 30% for 2001; previously, their guidance was in a range of 30% to 35%. Nortel expects first quarter revenues to be $8.1 billion, which is also slightly below Wall Street consensus of $8.2 billion, though it left its profit expectations at 16 cents per share.

Investors and analysts had expected Nortel to guide down this year's revenue growth expectations given the cooling of the economy and the equipment spending trends

Some observers thought a pull back in guidance to 27% would be in order given the deterioration of visibility -- the ability for a seller to forecast the buying trends of its customers.

There is a significant downside ahead for Nortel shares if the company can't justify its price-earnings ratio, which is about 35 on a forward basis. In other words, investors are expecting a 35% growth rate, so anything below that will likely be priced into the stock.

Nortel may have gave a preview of the year ahead last week as reports surfaced that the company was cutting 4,000 jobs or 4% of its 95,000 employees, mainly from the slower growing business units such as traditional telephone equipment.