Nortel Networks has recorded second quarter losses of $19.4 billion, one of the largest corporate losses in history, as the telecoms equipment market continues to remain in the doldrums.
It made sales of just $4.61 billion this quarter down from $7.21 billion in the same period last year, which was slightly better than analysts forecast after an earlier profit warning by Nortel.
The collapse of competitive carriers and dotcom firms in the States, has had a calamitous effect on networking firms, while a slowdown in IT spending in general has piled on the misery. Nortel gave no indication of when it expects matters to improve.
Most of Nortel's colossal losses this quarter are due to a US$12.3 billion charge it took to write down intangible assets, primarily goodwill related to acquisitions it made in the height of the dotcom boom.
"While I am disappointed with our results for the second quarter, we have taken the right steps in this environment to strengthen Nortel Networks leadership position," said John Roth, Nortel's president and chief executive officer.
"We are on track with our expected delivery over the next several quarters of next generation solutions in optical switching, metro optical, IP (Internet Protocol) networking, 3G (third generation) wireless infrastructure and IP services solutions for carriers and enterprises."
During the quarter, Nortel announced its plan to get out of the carrier access business as part of a wider restructuring program that involves the loss of 30,000 jobs.
Nortel said 23,000 people have been give pink slips so far and that a further 7,000 will be shown the door over the next eight weeks. The job cuts are expected to save Nortel $1 billion per quarter. ®
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