Nortel slashes outlook, looks for asset buyers
Telecommunications equipment maker warns that its business is slowing down due to the weak economy. It also says it is looking to sell off its metro Ethernet equipment business.
Telecommunications equipment maker Nortel Networks announced on Wednesday that it has slashed its business outlook and is looking to sell some of its assets as the economy worsens.
Nortel said its revenue for 2008 will be about 2 percent to 4 percent lower than it was the previous year. Third-quarter revenue will be about $2.3 billion, short of the $2.66 billion that some analysts had expected.
The company blames its woes on phone companies and large corporate customers, which have been cutting back on their capital expenditures more than had been expected. Nortel CEO Mike Zafirovski said the company is conducting a comprehensive review of its business. And he said it is looking for a buyer for its metro Ethernet equipment business.
Meanwhile, Cisco Systems, which competes with Nortel in some areas, on Tuesday at an analyst conference reiterated its confidence in its long-term growth projections of between 12 percent and 17 percent. CEO John Chambers noted slower near-term growth, as customers tighten their belts, but even in the short run, Cisco still expects to grow 10 percent.
Of course, Cisco has diversified its business in different areas and has always been focused on Internet Protocol technology. It is also pushing video technology as a main growth area. On the other hand, Nortel's products are focused on telecommunications, a segment that has come under severe pressure lately.