Sunday, August 9, 2009

Nortel Reports Stabilization in Q2

Nortel reported Q2 revenue of $1.97 billion, down 25 percent compared to prior year period but up 14 percent compared to the first quarter of 2009. Gross margin was 38.2 percent in the quarter, a decrease of 4.9 percentage points from the year ago quarter, and an increase of 2.1 percentage points from the previous quarter. The company's cash balance at June 30, 2009 was $2.56 billion, compared to $2.48 billion at March 31, 2009. 


"While we continue to be impacted by the economic environment and the Creditor Protection Proceedings, we have successfully stabilized the business since filing for creditor protection. Despite these challenges, our revenue is up quarter over quarter by 14 percent overall while our corresponding operating costs are down 15 percent resulting in strong margins. At the same time, our customer service levels remain strong," said Nortel CEO Mike Zafirovski.

Some highlights for the quarter:

  • CN revenues in the second quarter of 2009 were $920 million, a decrease of 20 percent compared with the year ago quarter with declines in the GSM and UMTS solutions and Circuit packet voice solutions businesses, while the CDMA solutions business was essentially flat.  The wireless segment benefited in the second quarter from the network expansion of a certain customer, however, in addition to the factors above, was negatively impacted by a reduction in spending by certain customers as a result of their change in technology migration plans. 


  • ES revenues in the second quarter of 2009 were $465 million, a decrease of 28 percent compared with the year ago quarter as a result of the factors noted above, namely decreased customer spending due to the economic conditions and the uncertainty created from the Company's Creditor Protection Proceedings. ES had strong growth sequentially due to increased spending by customers compared to the first quarter of 2009 when delays in spending were experienced and an increase in the recognition of deferred revenues in the second quarter of 2009.


  • MEN revenues in the second quarter of 2009 were $333 million, a decrease of 27 percent compared with the year ago quarter with impacts across all businesses. In addition to the factors above, revenues from certain customers in the second quarter of 2008 that did not repeat to the same extent in the second quarter of 2009 also impacted the year over year decline.


  • LGN revenues in the second quarter of 2009 were $199 million, a decrease of 37 percent compared with the year ago quarter. In addition to the factors described above, a majority of the decline was in LGN Carrier, primarily due to the recognition of certain deferred revenues in the second quarter of 2008 not repeated in the second quarter of 2009 and high sales volumes related to our 3G wireless products in the second quarter of 2008 not repeated to the same extent in the second quarter of 2009, as well as a significant foreign exchange impact due to the devaluation of the Korean WON against the US dollar.  The decrease was partially offset by the completion of network expansions related to certain customers in the second quarter of 2009.
http://www.nortel.com

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