Nortel Sees Wider Loss, Lower Revenue

Nortel

(NT)

will post a wider-than-expected loss on lower-than-expected revenue in the first quarter, as customers continued to put capital spending on hold.

The Toronto network equipment maker expects to lose 14 cents a share from continuing operations in the quarter on revenue of $2.9 billion. Analysts had been forecasting a loss of 13 cents on revenue of $3.0 billion. The expected loss includes a $200 million inventory writedown. Including workforce reduction, acquisition and other charges, the company said its bottom-line loss will be 26 cents a share.

"As we indicated on Feb. 12, 2002, customers were showing more resolve than originally anticipated to minimize spending in the near term," Nortel said. "For the quarter, we saw limited capital expenditures by customers, resulting in a sequential decline in revenues of approximately 16% compared to our previous guidance of approximately 10%."

Nortel also said it informed its banks that it will fully draw on a $1.75 billion bank facility that was due to expire Wednesday after failing to get the facility renewed. The company said it drew the facility down to take advantage of favorable terms, not because it has any immediate need for the money.

"The bank facility, which would otherwise expire on April 10, 2002, requires unanimous support of all 27 members of the global bank syndicate to renew and/or extend the facility. Despite the full support for an amendment of the facility by 24 banks representing approximately 95% of the total facility, the parties were not able to reach a satisfactory amendment agreement with the remaining three banks," Nortel said.