The Successful Investor Hotline – Friday, February 29, 2008

Article Excerpt

NORTEL NETWORKS CORP. $8.48, Toronto symbol NT, fell over 20% this week after it reported growing losses and a new restructuring plan. In 2007, Nortel lost $957 million or $1.98 a share (all amounts except share price in U.S. dollars). That figure included a $1.1 billion (pre-tax) non-cash writedown of a deferred tax asset. Excluding all one-time items, Nortel earned an estimated $0.23 a share in 2007. The company earned $28 million or $0.06 a share in 2006. Revenue fell 4.4%, to $10.9 billion from $11.4 billion, as it shifts from traditional telephone networking equipment to higher-margin wireless products and other technologies. The new restructuring plan will cut Nortel’s workforce by 6%, and shift more operations overseas. It will cost roughly $525 million, but should cut annual expenses by $300 million. Nortel’s improving balance sheet should help it overcome these setbacks. While long-term debt of $3.8 billion U.S. is a high 80% of its market cap, Nortel does hold cash of…