Nortel ends 1999 with strong earnings

Nortel ends 1999 with strong earnings


Citing its strong carrier and service provider businesses, Nortel Networks yesterday reported operational earnings for the fourth quarter, which ended December 31, of $US755 million, or 55 cents per share.

The results, which excluded one-time charges and other events, were up 53 per cent from the same period in 1998 and handily beat analyst estimates, Nortel said in a press release. The consensus forecast of 18 analysts polled by First Call was 45 cents.

Revenue for the quarter was $6.9 billion, up 21 per cent from $5.8 billion for the same period in 1998.

Including acquisition-related charges and other one-time events, Nortel recorded net earnings of $417 million or 30 cents per share in the fourth quarter. Among the one-time charges recorded during the quarter were expenses related to ongoing amortisation of assets from the 1998 acquisition of Bay Networks.

The increase in net earnings, excluding the one-time charges, was due mainly to higher revenue and a decrease in the effective tax rate, according to the company statement. The company's carrier and service provider businesses also remained strong.

For fiscal 1999 as a whole, revenue increased 26 per cent to $22.2 billion from $17.6 billion in 1998. Net earnings from operations for 1999 were $1.7 billion, or $1.28 per share, compared to $1.1 billion, or 93 cents per share for 1998, an increase of 38 per cent. This also beat the consensus forecast of $1.17 per share, by 21 analysts polled by First Call.

Including one-time gains and charges, Nortel had a net loss of $197 million, or a 15 cent per share loss, for 1999.

Key growth areas for the company for the year included optical and high-speed Internet access products, as well as wireless technology, John Roth, president and CEO of Nortel, said in a conference call yesterday. The company's strong fourth quarter put it in a good position for the start of fiscal 2000, he added.

Specifically, the company's business relating to optical Internet technology grew more than 80 per cent over 1998, Nortel said in its statement. The company did not immediately break out the actual revenue figure for 1999.

The company also said it had strong momentum in the wireless infrastructure business in the second half of fiscal 1999.

The Internet access business experienced triple-digit growth in the year, according to Frank Dunn, Nortel's senior vice president and chief financial officer, speaking at the conference call.

The company did experience a drop-off in business from the US regional Bell operating companies, but that was offset for the most part by an increase in business from competitive carriers, Dunn said. In general, the enterprise business -- consisting of corporations -- did not do as well as Nortel expected, Dunn noted.

Also, Roth said a stock split, subject to shareholder approval, has been proposed. A stock split would give shareholders two shares -- each worth half of current shares -- for every one they have now.

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