Nortel Returns to Profit for Q3 2007

Nortel Networks has returned to Q3 profit on lower legal and R&C costs compared to a year ago. The company reported net earnings of $27 million compared to a loss of $63 million a year earlier. Revenue was $2.7 billion for the third quarter of 2007 compared to $2.93 billion for the third quarter of 2006 and $2.56 billion for the second quarter of 2007. Expectations had been for sales of $2.78 billion, so the company slightly missed analyst forecasts.

"Nortel achieved solid results this quarter in a challenging business environment. We delivered operating margin of 5 percent, the highest since 2004, driven by the highest gross margin in nine quarters," said Mike Zafirovski, Nortel President and CEO. "I am also encouraged by the top-line activity. Adjusted for the UMTS sale, orders in the third quarter were up 9 percent and up 5 percent year to date, which demonstrates Nortel's increasing relevance in the marketplace. With an ongoing focus on customers and execution, we expect to continue to deliver operational and financial improvements in the fourth quarter and beyond."

Orders were up 2% year on year, to $2.38 billion and excluding the impact of the UMTS Access divestiture, orders increased by 9 percent year over year and by 5 percent year to date.

In the third quarter, as a result of a transition of a CDMA manufacturing centre, Nortel says that it encountered some difficulty in fulfilling certain customer orders resulting in the deferral of approximately $45 million in revenue.

Posted to the site on 6th November 2007