Nortel reports US$2.1B loss as revenue falls by 15%

The company has filed for Chapter 11 protection from creditors

Nortel Networks on Monday reported a loss of US$2.1 billion for the fourth quarter on sales of $2.72 billion, which were down 15% over the year earlier period.

The company also said that chief financial officer Pavi Binning will also serve as chief restructuring officer, overseeing the company's realignment following its January filing for Chapter 11 bankruptcy protection.

The Toronto-based networking equipment provider had said it filed for Chapter 11 protection from creditors due to declining sales amid a poor economy. Shares of the company's stock were trading for 7.7 cents this morning.

In a statement, Nortel CEO Mike Zafirovski blamed the fourth quarter revenue decline on market deterioration and decisions by customers to reduce or defer spending.

The CEO was not made available for questions on the financial results.

However, in the statement, Zafirovski did note that operating expenses in the fourth quarter were 30% less than the same period last year. Just last week, Nortel announced plans to lay off 3,200 workers in addition to 1,800 job cuts announced last year.

In addition, he said, "As Nortel continues to work through a complex global restructuring of its business, our focus remains firmly on maintaining high customer service levels for on time delivery, network stability and responsiveness. " In parallel, appropriate investments continue to be made in order to deliver the R&D and technology leadership that our customers require."

"At every level, our employees are working hard in an extremely difficult environment to deliver on our customer commitments and drive our business forward," he added. "Work is taking place across Nortel to develop a comprehensive plan to restructure Nortel into a more focused, leaner and more competitive company."

Nortel said that business declined in all of its major divisions during the fourth quarter. Sales in the enterprise solutions declined 30% to $535 million, the largest decline among the various groups.

Revenues for the full year 2008 were $10.42 billion, compared to $10.95 billion the previous year. The full year loss totalled $5.7 billion.

Nortel declined to speculate on future quarters, citing its restructuring and the "continued global economic uncertainty."

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