Tuesday, February 26, 2008

Nortel Reports Q4 Numbers, Announces Job Cuts

Nortel reported Q4 2007 revenue of $3.20 billion, down 4 percent year over year. Revenue was $10.95 billion for the full year, down 4 percent; however, excluding the impact of the UMTS Access divestiture, revenue increased by 2 percent in the quarter and grew by 2 percent for the full year. Compared to the third quarter of 2007, revenue grew by 18 percent. Nortel achieved Q4 Operating Margin (OM) of $244 million, an increase of 339 basis points compared to 2006 and achieved full year OM of 3.7 percent, the highest since 2000.

Nortel expects 2008 revenues to grow in the low single digits and OM to increase by about 300 basis points compared to 2007

Nortel also outlined the next steps of its previously announced Business Transformation plan. The company plans to cut its global workforce by approximately 2,100 positions and in addition move approximately 1,000 positions to higher growth and lower cost geographies. The plan also includes the sale of certain real estate assets. These actions are expected to result in annual gross savings of approximately $300 million, with total charges to earnings of approximately $275 million and cash outlays of approximately $250 million, however the actual costs could be lower with the redeployment of resources.

"Nortel continued to make strong progress in the fourth quarter as we completed a pivotal year in our transformation," said Nortel President and CEO Mike Zafirovski. "We are just over two years into a major transformation of Nortel. Significant progress has been made while upholding the highest standards of ethics and integrity. We have increased our profitability, improved organizational effectiveness and enhanced our competitiveness in the market. I am particularly pleased with the attainment of double digit productivity, which contributed to our gross margin improvements, and by our ability to shift significantly more R&D investments into growth and emerging new areas while reducing the overall R&D spend."http://www.nortel.com