Shares of Nortel Networks rose 12% as the company reported financial results ahead of market expectations based on stronger sales of both carrier and enterprise networking equipment.
Nortel's Q2 revenues were $2.86 billion, compared to $2.59 billion for the second quarter of 2004 and $2.54 billion for the first quarter of 2005. Net earnings in were $45 million, or $0.01 per common share on a diluted basis, including special charges of $90 million related to restructuring activities and $39 million of costs related to the sale of businesses and assets.
"Our results demonstrate progress against our strategic plan. I am pleased that our strategic objectives of cash, costs and revenue combined with a strong focus on our business operations and execution are delivering solid results," said Bill Owens, vice chairman and chief executive officer, Nortel. "We are playing to win, and Nortel's commitment is to long-term value, not just short-term gain."
Some highlights:
- Carrier Packet Networks revenues were $743 million, an increase of 3% compared with the year-ago quarter and an increase of 12% sequentially. Enterprise Networks revenues were $730 million, an increase of 26% compared with the year-ago quarter and an increase of 33% sequentially. GSM and UMTS Networks revenues were $719 million, an increase of 1% compared with the year-ago quarter and a decrease of 9% sequentially. CDMA Networks revenues were $662 million, an increase of 17% compared with the year-ago quarter and an increase of 24% sequentially.
- Gross margin was 43% of revenue, in line with expectations.
- Cash balance at the end of the second quarter of 2005 was $3.06 billion, down from $3.43 billion at the end of the first quarter of 2005.
