will cut 3,500 positions from its optical long haul business and said it might sell its optical components unit. The Toronto-based network equipment maker said it doesn't see a recovery in the long-haul segment before late 2003.
Nortel also said it expects second-quarter revenue to be equal to or down 5% from the $2.91 billion it posted in the first quarter, while its pro forma loss will narrow from the first quarter's 14 cents a share. Analysts polled by First Call were expecting a pro forma loss of 9 cents a share on revenue of $2.91 billion.
The company also said it's considering an equity financing.
"We are aligning our optical business model to where we see the industry going to ensure we are well positioned when spending resumes," the company said, adding that the reduction will bring its overall break-even cost structure to about $3.2 billion in quarterly revenue. Nortel said it expects the structure to be in place by the fourth quarter, during which analysts currently expect it to post $3.22 billion in revenue.
Nortel said the long-haul realignment will result in a $600 million charge, up to $200 million of which will be cash. The company said it "has sufficient liquidity to fund these actions and its operations, and expects to be in compliance with its covenants under various bank facilities, all of which are undrawn."
Nevertheless, the company said it "continues to consider opportunities to raise additional capital and may pursue an equity-based financing transaction as market conditions permit."