Nortel rocked by £14bn loss for Q2

Telecomes giant blames global slowdown in the telecoms industry for a massive loss as it announces 10,000 extra job cuts

Nortel Networks shocked the financial markets on Friday when it revealed that it expects to make a loss of £13.67n for the second quarter of this year, and is planning to axe a further 10,000 jobs.

Over half the loss is due to Nortel taking a $12.3bn charge for writing down certain "intangible assets". This includes the closure of its narrowband and broadband access solutions departments.

The company also suffered from a big drop in demand for its products during the quarter. Sales in the second quarter fall to £3.2bn, compared to £4.4bn in Q1. "Led by the United States, the global telecoms industry is undergoing a significant adjustment," said John Roth, Nortel's president and chief executive officer. "As a result, we are seeing a very significant reduction in equipment purchases in the second quarter of 2001 compared to the first quarter of 2001 and the second quarter of 2000," Roth added.

Admitting that it may well record a loss in the third-quarter of this year as well, Nortel announced that 10,000 jobs will be cut, on top of the 20,000 that have already been announced earlier this year.

The networking giant also warned that it could not see the telecoms sector recovering until the second half of next year. Its shares, which have been falling for most of this year, plunged nine percent in early trading in New York.

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