OTTAWA, Feb 15 (Reuters) - Nortel Networks Corp. , the world's No. 1 supplier of fiber-optic telecoms equipment, slashed its 2001 revenue forecast by half on Thursday, warning it would post a first-quarter loss and saying it would increase job cutbacks to 10,000.
Despite market fears of just such an earnings clawback -- which sent Nortel shares to a 52-week low on Wednesday -- the stock was hammered in after-hours trade. Nortel shares fell nearly 23 percent in after-hours trade on the Instinet to $22.98 from a close of $29.75 on the New York Stock Exchange. The stock closed at C$46.15, up C$1.14, on the Toronto Stock Exchange, ahead of the earnings warning.
Nortel said it now expects first-quarter revenues of $6.3 billion and a loss of 4 cents a share on a diluted basis amid an expected 20 percent decline in the U.S. market, led by a slowdown in optical equipment sales.
That is an 18 percent cut from the $8.1 billion in revenues forecast by analysts polled by First Call/Thomson Financial and a dramatic drop from earnings forecasts of 16 cents a share.
The company said it was now seeing a faster and more severe economic downturn in the United States -- which represents 65 percent of sales -- and said that revenues would grow by 15 percent and earnings 10 percent in 2001.
Nortel had previously forecast earnings and revenues would rise 30 percent in 2001. That estimate was reduced in January from an earlier forecast of 30-35 percent growth.
Based on the new estimates, Nortel will report 2001 revenues of about $34.8 billion and earnings of about 81 cents a share. Analysts polled by First Call/Thomson Financial had previously forecast earnings of 96 cents a share on revenues of $39.1 billion.
Brampton, Ontario-based Nortel also said it would now eliminate a total of 10,000 jobs to boost profitability, raising the number cutbacks from 4,000 announced in early January. The company said it has, in fact, trimmed 6,000 jobs since its January announcement. The staff reductions will help trim costs in line with the second quarter of 2000.
"I was not expecting them to announce a loss in the first quarter," said Brian Piccioni, analyst at BMO Nesbitt Burns.
"Given that they had reiterated on numerous occasions the first-quarter outlook, including a few weeks ago, I figured that that must be in the bag. And certainly the reduction of 10,000 employees is a bit of a shock."
Nortel, which had repeated its first-quarter guidance at least three times, said in early January it would lay off as many employees as it hired in 2001 to keep its staff at 2000 levels of about 86,000 and focus on high growth areas.
Despite market fears of just such an earnings clawback -- which sent Nortel shares to a 52-week low on Wednesday -- the stock was hammered in after-hours trade. Nortel shares fell nearly 23 percent in after-hours trade on the Instinet to $22.98 from a close of $29.75 on the New York Stock Exchange. The stock closed at C$46.15, up C$1.14, on the Toronto Stock Exchange, ahead of the earnings warning.
Nortel said it now expects first-quarter revenues of $6.3 billion and a loss of 4 cents a share on a diluted basis amid an expected 20 percent decline in the U.S. market, led by a slowdown in optical equipment sales.
That is an 18 percent cut from the $8.1 billion in revenues forecast by analysts polled by First Call/Thomson Financial and a dramatic drop from earnings forecasts of 16 cents a share.
The company said it was now seeing a faster and more severe economic downturn in the United States -- which represents 65 percent of sales -- and said that revenues would grow by 15 percent and earnings 10 percent in 2001.
Nortel had previously forecast earnings and revenues would rise 30 percent in 2001. That estimate was reduced in January from an earlier forecast of 30-35 percent growth.
Based on the new estimates, Nortel will report 2001 revenues of about $34.8 billion and earnings of about 81 cents a share. Analysts polled by First Call/Thomson Financial had previously forecast earnings of 96 cents a share on revenues of $39.1 billion.
Brampton, Ontario-based Nortel also said it would now eliminate a total of 10,000 jobs to boost profitability, raising the number cutbacks from 4,000 announced in early January. The company said it has, in fact, trimmed 6,000 jobs since its January announcement. The staff reductions will help trim costs in line with the second quarter of 2000.
"I was not expecting them to announce a loss in the first quarter," said Brian Piccioni, analyst at BMO Nesbitt Burns.
"Given that they had reiterated on numerous occasions the first-quarter outlook, including a few weeks ago, I figured that that must be in the bag. And certainly the reduction of 10,000 employees is a bit of a shock."
Nortel, which had repeated its first-quarter guidance at least three times, said in early January it would lay off as many employees as it hired in 2001 to keep its staff at 2000 levels of about 86,000 and focus on high growth areas.
