Nortel's Q3 Results
As Nortel stumble towards the financial restatement finish line, the numbers are coming out fast and furious. Today, the telecom equipment maker said it had an unaudited loss of six cents (US) in the third quarter on sales of US$2.3 billion. If you take out one-time losses and gains, it looks like Nortel was just slightly in the red. The fourth-quarter looks fairly good with sales expected to be US$2.8-billion to US$2.9-billion. Early reaction from analysts suggests they are not overly impressed.
After Nortel completes its financial overhaul, it is important for the investment community to start looking at what's on the horizon for Nortel. First, the telecom market itself which will only growth in low single-digits at a time when competition from low-cost players such as China's Huawei Technologies is intensifying. While Nortel has done well in wireless, its IP and enterprise units have been mediocre. Nortel's senior management will also be distracted by the flurry of class-action lawsuits that have been filed. It is impossible to know how much this will cost the company - estimates have run from US$500 million to US$1 billion - but the lawsuits will be a major distraction. Finally, you have to look at the future of CEO Bill Owens. After Nortel returns to some sense of stability, is Owens the right person to re-ignite growth? Would Nortel be better off with a CEO who have deep telecom experience and a strong handle on where the telecom industry is heading?
