Nortel Posts Big Loss
Posted by admin on 11/10/2008
Nortel Networks Corp. announced Monday that it will slash 1,300 more jobs, including key management positions, and freeze salaries after posting a $3.4-billion third-quarter loss.
The telecommunications equipment manufacturer said the loss was inflated by a $1.14 billion writeoff of goodwill, which is the amount paid for previous acquisitions above their tangible value, as well as a $2.13 billion income tax hit.
In contrast to a net income of $27 million, or five cents per share, in the same period one year ago, the loss equalled $6.85 per share.
The Toronto-based company also experienced a 14 per cent drop in sales, to $2.32 billion, as its customers “cut back sharply on corporate spending,” BNN’s Michael Kane said Monday on CTV’s Canada AM.
The company is warning that earnings in the current quarter may fall short of expectations, Kane said.
Nortel is also reporting that it is suspending the dividend on preferred shares.
“That almost never happens,” Kane said.
In a news release, the company said that, “while (Network Networks Limited) is in a position to pay such dividends, its board of directors has determined that in this uncertain economic environment it would be prudent to maintain liquidity and preserve cash.”
www.ctv.ca
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