Nortel repeats growth projections to Wall Street
Chief executive John Roth repeats that he expects revenue and earnings per share to grow in the low-40 percent range.
Speaking at a company conference for financial analysts Tuesday, chief executive John Roth reiterated that he expects revenue and earnings per share to grow in the low-40 percent range. This amount is about what the company expects to have in calendar year 2000 and twice what he predicted to analysts one year ago.
But investors have felt lately that the growth of Nortel and its competitors may not last. Some Wall Street analysts have predicted a slowdown in telecommunications and network equipment sales next year.
And while Nortel beat earnings last quarter, sales of its flagship optical network equipment sales only grew 90 percent in the quarter, 30 to 35 percent less than some analysts had expected. Now Nortel has lowered its expectations for its optical equipment business, to about 40 percent revenue growth next year.
In hopes of reassuring investors and stemming the downturn in its stock price, Nortel on Monday reiterated what it told analysts Nov. 1: The fourth quarter should see revenues of about $8.5 billion to $8.8 billion with earnings of about 26 cents per diluted share. The company also reiterated first-quarter estimates of revenues of $8.1 billion to $8.3 billion with 16 cents per-share earnings.
A First Call/Thomson Financial survey estimate has fourth-quarter and first-quarter earnings the same as those predicted by Nortel.
Future is wireless Internet
Nortel executives said the future for Nortel lies in using its strong sales in optical equipment to help spur sales of wireless equipment.
Nortel is looking globally at the top wireless markets and at partnering with "first movers" such as BT Wireless and Vivendi to carry third-generation, or 3G, wireless data traffic across its equipment.
"Ericsson is clearly No. 1" in the third-generation wireless market, Roth said, but "Nortel is positioned to be a strong No. 2."
Nortel touted a recent Dell'Oro third-quarter 2000 report that suggested Nortel had 43.2 percent of the optical transport market, up from 31.4 percent the same quarter last year. Nortel also claimed the top market share in long-haul dense-wavelength division multiplexing (DWDM), metropolitan DWDM (Roth said Nortel had 53 percent market share there) and SONET/SDH systems.
Teleglobe deal
In related news, Nortel and BCE subsidiary Teleglobe signed a three-year deal announced late Monday. Teleglobe will use Nortel's long-haul optical-line system known as OPTera to transport high-bandwidth Internet and voice services in North America, Europe and Asia. One of the first routes in North America will be New York to Montreal.
Nortel also will activate Teleglobe's network in Tokyo and new European fiber-optic routes that will cover Belgium, France, Germany, Luxemburg, the Netherlands and the United Kingdom.
News.com's Wylie Wong contributed to this report.