Nortel stock goes into freefall

Nortel woke up with a hangover this morning to find that its shares had crashed by 32.8 per cent and were still falling as the New York Stock Exchange opened.

The telecom and optical equipment maker yesterday announced, after the NYSE had closed, that it would be cutting 10,000 jobs, instead of the expected 6,000 and that growth this year would be 10 per cent instead of the expected 30 per cent. At the close of trading, shares had been driven down from a closing price $29.75 in what the New York Times claims was a suspiciously large volume of trading of shares and options. Shares opened at $20 today in New York and slowly continued to drop, but there are indications that the stock is beginning to rally. Rating agency Standard & Poor's, yesterday announced it was increasing the weighting, or importance, of the values of Nortel stocks on its three Toronto Stock Exchange indices.