Citing the global economic turbulence as well as impacts from its own bankruptcy filing in January, Nortel reported Q1 revenues of $1.73 billion, decreased 37 percent compared to prior year period. Excluding the negative impact of foreign exchange fluctuations, the decrease would have been 29 percent.
"First quarter results showed a decline in revenue and margins as expected due to the severe economic downturn and our filings for creditor protection. However, despite the declines we saw this quarter, revenue has stabilized and our cash balance is stable from year-end 2008. "We accomplished our initial objectives of maintaining our customer commitments and strengthening our operational performance. Network performance and customer service levels are at multi-year highs and customers are expressing their support of Nortel. Our employees have done a tremendous job under challenging conditions," stated Mike Zafirovski, Nortel's CEO.
Some highlights of the quarterly report:
- Cash balance on March 31, 2009, of $2.48 billion, compared to $2.4 billion at year-end 2008.
- The evaluation of Nortel's businesses - Carrier Networks (which includes Wireless Networks as well as Carrier VoIP and Application Solutions or CVAS), Metro Ethernet Networks, Enterprise Solutions and the LG-Nortel joint-venture - is ongoing.
- Nortel will decentralize its Carrier Sales and Global Operations functions over the coming weeks. This will enhance the business units' overall responsiveness to changing customer and market requirements and provide the opportunity to better serve customers.
- For the Carrier Networks group, a majority of the revenue decline was in the wireless segments, including a reduction in spending by certain customers as a result of their change in technology migration plans.
- Enterprise Solution revenues in the first quarter of 2009 were $395 million, a decrease of 41 percent compared with the year ago quarter as a result of the factors noted above, namely decreased customer spending and decision-making deferral due to the economic conditions and the uncertainties created from our Creditor Protection Proceedings.
- Metro Ethernet (MEN) revenues in the first quarter of 2009 were $360 million, a decrease of 10 percent compared with the year ago quarter with impacts across all businesses. Excluding the negative impact of foreign exchange fluctuations, revenues for MEN would have declined 6 percent year-over-year.
- LG-Nortel revenues in the first quarter of 2009 were $188 million, a decrease of 66 percent compared with the year ago quarter. In addition to the factors described above, a majority of the decline was in LGN Carrier, primarily due to the completion of a certain customer contract obligation that resulted in the recognition of previously deferred revenues in the first quarter of 2008 not repeated in the first quarter of 2009 and high sales volumes related to 3G wireless products in the first quarter of 2008 not repeated to the same extent in the first quarter of 2009, as well as a significant foreign exchange impact due to the devaluation of the Korean WON against the US dollar. The decrease was partially offset by the completion of a certain customer contract obligation resulting in the recognition of previously deferred revenues in the first quarter of 2009.
