Nortel Sees Sales Shortfall

Nortel ( NT) dropped its second bomb in as many days, saying weaker-than-expected buying by customers will make it difficult to meet its first-quarter revenue goals.

The Toronto networking-gear giant said that it still expects business to pick up in the second quarter and for sales to rise somewhat from their first-quarter levels. But the company said its previous goal of a 10% sequential decline in first-quarter sales will be challenging.

The company expects to be profitable in the fourth quarter of 2002.

Analysts polled by First Call were expecting Nortel to lose 13 cents a share on revenue of $3.09 billion in the first quarter and to break even on revenue of $3.64 billion in the fourth quarter.

"We note that activity over the last 25 days has indicated even more resolve by customers than originally anticipated to minimize spending in the near term and this will make the task of delivering on our first-quarter sales outlook more challenging," said Nortel Chief Executive Frank Dunn.

Dunn is acting as the company's chief financial officer following the departure Monday of Terry Hungle. Hungle left the company after it was revealed that he made inappropriate trades in mutual funds owning Nortel stock.

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