TORONTO – The losses continue at struggling Nortel Networks as it reported a loss of US$507 million in its first quarter, compared to a $138 million loss a year ago.
Revenues for the quarter ended March 31, 2009, were $1.73 billion, a 37% year-over-year decrease across all business segments, while management operating margin (MOM) was negative $244 million, compared with positive MOM of $129 million in first quarter of 2008. The company blamed the results on “the severe economic downturn” and its filings for creditor protection in January.
Despite the declines, president and CEO Mike Zafirovski said in a press release that the company’s revenue “has stabilized” and its “cash balance is stable from year-end 2008.”
"We accomplished our initial objectives of maintaining our customer commitments and strengthening our operational performance,” Zafirovski said in the release. “Network performance and customer service levels are at multi-year highs and customers are expressing their support of Nortel. Our employees have done a tremendous job under challenging conditions."
The release also detailed Nortel’s plans to continue to move to standalone businesses for its Carrier Networks (which includes Wireless Networks as well as Carrier VoIP and Application Solutions), Metro Ethernet Networks, Enterprise Solutions and the LG-Nortel joint-venture.
The press release said that the move “will provide Nortel with maximum flexibility to choose the ultimate path forward for each of the businesses”, which sparked speculation that the company could be broken up and sold off in pieces, rather than restructured.
Nortel did not hold a conference call to discuss the results, and said that it also has cancelled its annual meeting this year.
