Nortel Networks Says Business has Stabilized, Expensing of Stock Options to Begin

Nortel Networks said its overall revenues were up sequentially across all of its lines of business and geographic regions during Q4. The company said its fundamental business model has stabilized and that it ended the year with a cash balance of approximately US$4.1 billion. It expects to achieve pro forma profitability by Q2 2003. Nortel also expects to have 36,000 employees at the end of Q1 2003 and believes its series of staff reductions is nearing an end. Overall, Q4 revenues from continuing operations were US$2.52 billion, compared to US$3.46 billion in the same period in 2001. There was a net loss for Q4 of US$248 million, or US$0.06 per common share. As for its outlook in 2003, Nortel Networks expects the overall telecommunications equipment market to be down modestly compared to 2002. In addition, Nortel Network has adopted a policy of fair value accounting for stock options. As a result, all stock option grants in 2003 and beyond will be expensed over the stock option vesting period based on the fair value at the date the options are granted.
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