Troubled telecom equipment maker Nortel has posted a 75 per cent drop in profit in its fourth quarter.
The Canadian-based company's delayed fourth quarter earnings come as it gradually gets its books back in order after an accounting scandal that led to several restated results, a regulatory investigation and the firing of a number of executives.
Revenues were $2.62bn for Q$ 2004, compared to $3.27bn a year earlier. Net profit fell significantly from $133m, or $0.03 per diluted share, down from $528m, or $0.12 per share, a year earlier - a drop of 75 per cent. Revenue and per share earnings for the quarter were above Wall Street analysts' estimates of $2.51bn and $0.01 respectively.
Revenues dropped in all of Nortel's segments, including its wireless division, which saw earnings drop 11 per cent year-on-year to $1.28bn. Wireline networks revenues fell 19 per cent to $461m. Similarly, enterprise networks revenues totalled $651m, down 31 per cent from the year-ago quarter, while earning in the optical networks division dropped 28 per cent to $226m.
Despite the poor results, Nortel was pleased that the accounting issues of the past quarters had been resolved and was bullish about the future.
"I am proud of the progress we made during the past year, delivering solid performance in our core businesses through extremely unique and challenging circumstances," said Bill Owens, vice-chairman and chief executive officer of Nortel. "Our message is clear: Nortel is playing to win. In the past year, we've stabilised the business and laid the groundwork to move forward with velocity."
The company also posted its delayed 2004 audited results on Monday. For the year 2004 Nortel reported a loss of $51m, or $0.01 per share, compared to a profit of $434m, or $0.10 per share in 2003. Revenues were also down in 2004 to $9.83bn compared to $10.19bn for the year 2003.
"We remain focused on our core businesses and positioning Nortel to grow our revenues by leveraging our leading portfolio of next-generation solutions, capitalising on high growth markets in Asia and new opportunities in federal systems, security and services," said Owen. "Specifically we expect strong growth in our voice over packet, third-generation wireless, metro optical, wireless LAN and converged network solutions, coupled with new customer builds and network expansions. We continue to expect the demand for our mature solutions will decline."
With the fourth-quarter and 2004 audited financial results filed with regulators, Nortel is almost up to date on its filings and, if all goes to plan, it will become current with regulators in Canada and the US when it files its 2005 first-quarter results towards the end of May.