Nortel: CEO Considers Q3 Earnings 'Solid'

Nortel (NT) posted a third-quarter earnings per share of five cents, compared with analysts’ expectations of 11 cents, on sales of $2.7-billion.

At first blush, the performance is all right. Looking forward, Nortel expects fourth-quarter revenue to be flat from a Q4 2006 (taking into account the sale of its UMTS unit to Alcatel-Lucent (ALU)), gross margins will improve slightly while operating margins will be about 10% of revenue.

Nortel CEO Mike Zafirovski describes Q3 as “solid” in a “challenging business environment”.

We delivered operating margin of 5 percent, the highest since 2004, driven by the highest gross margin in nine quarters. I am also encouraged by the top-line activity. Adjusted for the UMTS sale, orders in the third quarter were up 9 percent and up 5 percent year to date, which demonstrates Nortel’s increasing relevance in the marketplace. With an ongoing focus on customers and execution, we expect to continue to deliver operational and financial improvements in the fourth quarter and beyond.