Stocks to Watch: Nortel Plunges on Lowered Outlook

Updated from 12:41 p.m. EDT

  • Nortel ( NT) warned Tuesday that third-quarter revenue would come in below its previous guidance and said it would cut 7,000 additional jobs. The network-equipment giant cited continued spending cutbacks among U.S. telecommunications carriers. As a result, the company said it expects quarterly revenue from operations to drop 10% on a sequential basis, compared with its initial forecast of essentially flat revenue growth.

    Nortel also outlined additional restructuring efforts, saying it plans to pare its cost structure to below $2.6 billion from $3.2 billion by cutting jobs and shutting down some of its facilities. The company expects the restructuring activities to be largely completed by the end of the fourth quarter of 2002, including a reduction in its workforce to 35,000, and projects a return to profitability by the end of June 2003. Shares plunged 15.4% to $1.04 on the news.

  • Amgen ( AMGN) received final regulatory approval in Europe for two cancer drugs. The European Commission approved Aranesp to treat anemia in adult patients receiving chemotherapy for solid tumors. The drug is already used to treat chronic kidney disease. The commission also signed off on Neulasta, which is designed to reduce neutropenia, a severe side effect of chemotherapy.

  • Office Depot ( ODP) said third-quarter same-store sales likely will be weaker than expected because back-to-school shoppers are spending less than the office supplies seller anticipated. The Delray Beach, Fla., company said in its midquarter update that North American same-store sales for the third quarter will decline in the low single digits, but added that trends have improved in recent weeks. The company remains comfortable with Wall Street's current third-quarter earnings forecast of 27 cents a share as cost controls and continued strength in gross margins have offset sluggish sales at stores open at least a year.

  • Washington Mutual ( WM) said it will buy HomeSide Lending, the U.S. mortgage unit of National Australia Bank ( NAB), for about $1.3 billion in cash. As part of the agreement, Washington Mutual will also assume $735 million of debt. Washington Mutual expects the acquisition to slightly impact its 2002 earnings results. The deal is expected to be completed by early fourth-quarter 2002. Its shares lost 1.3% to $37.02.

  • Medical equipment maker Guidant ( GDT) upped its third-quarter earnings and revenue outlook citing the increasing strength of its cardiovascular treatment business. The Indianapolis-based company, which manufacturers pacemakers and stent systems, raised guidance to 52 cents to 55 cents a share on $800 to $825 million in revenue from previous estimates of 52 cents and $789.8 million. Its shares climbed 1.6% to $35.76.

  • Surgical rehabilitation provider HealthSouth ( HRC) plunged 24% to $5.09 Wednesday after shedding nearly half their value in Tuesday's session. The company said yesterday that its earnings before interest, taxes, depreciation and amortization would be about $175 million light due to changes in the way the government reimburses some of its procedures. Things worsened for the stock Wednesday when it received a series of investment downgrades, including one from Salomon that cited, among other things, investor scorn that isn't likely to clear up in the near term.

  • Province Healthcare ( PRV) saw its shares drop 9.1% to $16.40, despite reaffirming its third-quarter earnings forecast of 19 cents a share, which would be best its year-ago performance by 5 cents.

  • Semtech ( SMTC) reversed a year-ago loss and matched the second-quarter earnings estimate, but forecast lower third-quarter earnings due to weak consumer demand for semiconductors. The company earned $11.1 million, or 14 cents a share, in its second quarter compared with a loss of $5.1 million, or a loss of 7 cents a share, last year. Semtech expects third-quarter EPS of 14 cents and revenue to be unchanged to down 5% from the second quarter. The stock fell 26% to $14.05.

  • Cirrus Logic ( CRUS) confirmed it still expects to lose money in its second quarter and said lower consumer confidence has prompted the company to take a "conservative" outlook for the upcoming holiday months. For the quarter ending Sept. 28, the company expects a loss of 6 cents to 10 cents a share. Analysts were predicting the company would lose 7 cents a share. Cirrus's shares were recently down 12%, to $4.07.

  • Corinthian Colleges' ( COCO) fourth-quarter earnings rose 58.9% and came in higher than analysts were predicting, thanks to a rampup in online program registrations and effective cost controls. The company said it earned $12 million, or 27 cents a share, compared with $7.6 million, or 17 cents a share, a year ago. It also raised guidance for the first quarter and full-year 2002.

    More from Stocks

    Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

    Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

    3 Great Stock Market Sectors Millennials Should Invest In

    3 Great Stock Market Sectors Millennials Should Invest In

    Why Millennials Are Ditching Stocks for ETFs

    Why Millennials Are Ditching Stocks for ETFs

    Trump's 'Space Force' Could Launch a $1 Trillion Industry, Morgan Stanley Says

    Trump's 'Space Force' Could Launch a $1 Trillion Industry, Morgan Stanley Says

    Abiomed Stock Should Rise Some 12% From Here, Piper Jaffray Analyst Says

    Abiomed Stock Should Rise Some 12% From Here, Piper Jaffray Analyst Says