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March 6, 2008 |
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NORTEL NETWORKS: Posts US$844MM Net Loss in Fourth Quarter 2007 Nortel Networks Corp. reported financial and operating results for the fourth quarter and full year of 2007. The Company reported a net loss in the fourth quarter of 2007 of US$844 million, compared to net loss of US$80 million in the fourth quarter of 2006 and net income of US$27 million in the third quarter of 2007. Nortel reported a net loss for 2007 of US$957 million, compared to net earnings of US$28 million for the year 2006. Revenue was US$3.2 billion for the fourth quarter of 2007 compared to US$3.3 billion for the fourth quarter of 2006 and US$2.7 billion for the third quarter of 2007. In the fourth quarter of 2007, revenue increased by 18% compared to the third quarter of 2007 and excluding the impact of the UMTS Access divestiture, revenue increased by 2% compared with the year-ago quarter. For 2007, revenues were US$10.95 billion compared to US$11.4 billion for 2006. "Nortel continued to make strong progress in the fourth quarter as we completed a pivotal year in our transformation," Nortel President and CEO Mike Zafirovski said. "In a period of significant change for our industry, we have now reported six consecutive quarters of strong year over year improvement in operating margin, reflected in a 353 basis points improvement in the second half of 2006 and a 369 basis points improvement in 2007. Although our fourth quarter operating margin was below our target, it is the highest in 12 quarters. We also recorded a 386 basis point increase in gross margin to 43.7%, also the highest in 12 quarters. And most importantly, customers around the world are validating our strategic direction by signing up for multi-year engagements that leverage both our technological innovation and world-class know-how. We ended the year with a positive book to bill of 1.01 in the fourth quarter." Gross margin was 43.7% of revenue in the fourth quarter of 2007. This compared to gross margin of 39.8% for the fourth quarter of 2006 and 43.0% for the third quarter of 2007. Compared to the fourth quarter of 2006, gross margins benefited primarily from productivity improvements and mix. Cash balance at the end of the fourth quarter of 2007 was US$3.5 billion, up from US$3.13 billion at the end of the third quarter of 2007. The increase in cash was primarily driven by cash from operating activities of US$417 million and a positive impact from foreign exchange of US$16 million, partially offset by cash used in financing activities of US$23 million and cash used in investing activities of US$6 million. Outlook Nortel provided its financial outlook for the full year 2008, and expects: * Revenue to grow in the low single digits compared to 2007; * Gross Margin to be about our business model target of 43% of revenue; * Operating Margin as a percentage of revenue to increase by about 300 basis points compared to 2007. At Dec. 31, 2007, the company's balance sheet showed total assets of US$17.0 billion and total liabilities of US$13.4 billion, resulting in a US$2.7 billion, stockholders' equity. Equity, on Sept. 30, 2007, was US$2.9 billion and, on Dec. 31, 2006, was US$1.1 billion. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/ -- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance By simplifying networks and connecting people to the information they need, when they need it. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel does business in more than 150 countries including Indonesia, the United Kingdom, Denmark, Russia, Norway, Australia, Brazil, China, Singapore, among others. * * * Nortel Networks Corp. still carries Moody's Investors Service 'B3' Senior Unsecured Debt rating which was placed on March 22, 2007. |
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