Nortel Networks has indicated that it won't be waking from its financial nightmare anytime soon when it delayed the release of its financial statements for the third time because it found additional problems with its revenue reporting for past results.
The network gear maker is being investigated by the Ontario Securities Commission and the US Securities and Exchange Commission (SEC) regarding the restatement of financial results back to 2001. Due to the work involved in the restatement, the company has not filed financial statements for any quarter this year.
As part of the ongoing investigations, Nortel, a major supplier of wireless and wireline network infrastructure, must give a biweekly regulatory disclosure to the Ontario Securities Commission. Over the past two weeks, the company found what it called revenue reporting issues that require "double-checking of several revenue areas".
Nortel's adjustments to its financial statements came primarily in its optical networks and enterprise networks divisions, it said.
The company now intends to move about $US2.5 billion of revenue booked in 2000, and $US600 million in 1999, to later years, while $US250 million in 2000 will be "permanently reversed".
The previous figures were incorrect because, among other problems, legal title to products hadn't transferred to customers, criteria for recognising revenue prior to shipment hadn't been met and "collectibility issues existed", Nortel said.
For the planned restatement of the 2003 results, Nortel said it now expected the reduction from previously announced net income to be 35 per cent instead of 50 per cent, and that percentage revenue growth for 2004 over 2003 to be "in the low single digits".
Nortel said it now hoped to complete the work on its financial statements within 30 to 60 days. Nortel missed its own deadlines for the revenue restatements in September and October.
The companysaid, however, that if it failed to meet a December 15 deadline for filing its 2003 annual report with the SEC, the New York Stock Exchange "may commence suspension and delisting procedures" of the company's shares.