Nortel shares sink after earnings warning
The stock closed down $2.76 to $14 on trading of nearly 35 million shares. Earlier, shares hit $13.10.
In the warning--its second in two months--the optical equipment maker said first-quarter earnings and revenue numbers will not meet previous expectations.
The Canadian company said it now expects to report a loss of between 10 cents and 12 cents a share, on revenue of $6.1 billion to $6.2 billion. Nortel had earlier expected to report an operating loss of 4 cents per share, on revenue of $6.3 billion.
Nortel last cautioned investors of troubles on Feb. 15.
"It's more of the same. Most analysts had expected them to guide down. The guidance wasn't materially different from the first quarter," said Ted Moreau, managing director at investment bank Robert W. Baird. "The bigger news is that they're not offering guidance for the rest of the year. They don't want to commit themselves."
Previously, Moreau said, Nortel predicted earnings growth of 10 percent in 2001, with most of that coming during the second half of the year.
"Now they're saying, 'We're not so sure,'" he said. "Most estimates for analysts were much lower already. Now it's anybody's guess what the second half will be like."
The company is feeling the pinch from lower-than-expected spending by telecom companies. Similar problems have also affected other equipment companies, such as Lucent Technologies and Cisco Systems.
"Reduced and/or deferred capital spending and increased pricing pressure are resulting in lower overall revenues, particularly in the United States," Nortel CEO John Roth said in a statement.
The company did not offer guidance for the rest of the fiscal year.
"Given the poor visibility into the duration and breadth of the economic downturn and its impact on the overall market growth in 2001, it is not possible to provide meaningful guidance for the company's financial performance for the full year 2001," Roth said in the statement.
Nortel also announced plans for further layoffs, which would bring the total number of employees cut by the middle of 2001 to 15,000.
News.com's Corey Grice contributed to this report.