Nortel Buzzboard

There has been a lot of coverage today on Nortel’s 2Q08 financials - not all of that coverage has been positive obviously. Below I’ve linked to some articles and pulled some quotes from industry coverage.

FYI — Seeking Alpha has posted the transcript from this morning’s call in case you’d rather read it than listen to it.

Here’s a quick list of some articles/blogs that provided some detail, insight and analysis:

Global & Mail: Nortel not down and out yet, analyst says
Brad Reese’s on Network World: Nortel 2008 2nd quarter results: Strong interest in 40G products with 20 wins
Mark Evan’s All About Nortel blog: “Challenging” = Tough Times
Canadian Press: Nortel loses US$113 million in Q2 as revenues rise two per cent to $2.62 billion

Here are a couple of quotes, from both Nortel execs and analysts, from today’s coverage:

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I listened in on Nortel’s 2Q08 earnings call this morning, led by Nortel CEO Mike Zafirovski and CIO CFO Pavi Binning. You can access their presentations slides and hear a replay of the call here if you are interested.

Below are a few interesting points that I took from the call (not necessarily in order of the conversation on the call).

Revenue for the quarter was at $2.6 billion, up 2% year-over-year. For 1H08, Nortel’s revenue is now up 7% YoY.
Mike Z and Pavi Binning highlighted several times the continued progress with gross margins and operating margins. In the press release, Mike Z highlights: “We delivered gross margin of 43.1%, the seventh consecutive quarter of year-over-year improvement, and management operating margin of 4.3%, the eighth consecutive quarter of year-over-year improvement.”
The presentation highlighted gross margin improvements in Carrier Networks, Enterprise Solutions, and Global Services.
The presentation highlighted “significant improvements in G&A,” driven by cost reductions in IT and finance.
Mike Z said that in the second half of 2008, Nortel would be increasing and refocusing sales resources to focus on the growth segments of 40gig and unified communications
Mike Z said that: We have invested heavily in Enterprise and MEN, and we are starting to see the trajectory to growth in those areas.
A quick mention of an org change was mentioned, as Samih Elhage was announced as the new leader of the Carrier VoIP and Applications business.
Carrier Networks: quarterly revenue was down 2% YoY. CDMA revenue down 10%, with GSM/UMTS revenue up 11% YoY. The decrease in CDMA revenues, along with comments during the presentation of a slowdown in U.S. carrier spending were discussed during the call. One analyst asked about Nortel’s CDMA market share, to which Mike Z responded: “…certainly over the last couple of years we have gained [CDMA] market share and we don’t expect to lose that going forward.”
Enterprise Solutions: revenues were up 3% YoY. Gross margins increased while management operating margins decreased, reflecting increased marketing and R&D spending in the area. An analyst point out that the enterprise businesses still didn’t have a positive margin, and asked Mike Z how confident he was in this changing in 2H08. Mike Z commented that gross margin in the enterprise business had improved nicely in the quarter, and that Nortel expects enterprise to have a positive OM in the 2nd half.
Metro Ethernet: Revenues were up 4% YoY, with gross margins flat and management operating margin up. Several times during the presentation, Mike Z highlighted the growing momentum for Nortel’s 40gig solution. Nortel now has twenty 40gig wins, plus five tier one trials. Mike highlighted that at the last update (the analyst day event) that number was at 14 wins.
Global Services: Revenues were up 9%, with higher gross margins and management operating margins. A quick calculation shows that Global Services accounted for just over 20% of Nortel’s total revenues in 2Q08.

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This morning Nortel issued its financial results for the second quarter of 2008.  You can see the full press release here.

Nortel CEO Mike Zafirovski and CFO Pavi Binning are hosting a conference call to go over the results starting at 8:30am ET (right now).  The easiest way to listen in is to go to the related Investor Relations page right before the start of the call and listen in through the live webcast.

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This Friday Nortel will announce earnings for the second quarter of 2008. The press release is expected to go out at 6:00am ET. At 8:30am ET, Nortel CEO Mike Zafirovski and CFO Pavi Binning will host a conference call to go over the results.

The easiest way to listen in is to go to the related Investor Relations page right before the start of the call and listen in through the live webcast.

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There has been a lot of coverage of Nortel’s 1Q08 earnings news today, so I figured I’d pull a couple of the more informative articles together for your reading pleasure:

Reuters has this article, which includes comments from several investment analysts, and includes Mike Z’s comments on CDMA revenues.
Bloomberg’s article has some additional details on how Nortel’s results compared to analyst estimates, and includes some details on the LG-Nortel business.
The Toronto Star has this article that includes multiple quotes from Mike Z.
This Ottawa Citizen article includes details on Nortel’s performance in Asia.
All About Nortel pulls together various comments on the results.
Fortune’s Daily Briefing blog compares Nortel’s outlook to that of Alcatel-Lucent’s.
ADDED: On Rich …

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Earlier today, Nortel issued our 1Q08 financial results.  The quick summary of the news is as follows:

Revenue in the first quarter of $2.76 billion, up by 11 percent year over year
Gross margin in the first quarter of 41.6 percent, up 120 basis points year over year
Operating margin in the first quarter of 4.7 percent, up 512 basis points year over year.
Cash balance, as at March 31, 2008 of $3.22 billion.

One item that you might have questions on from the news was the fact that LG-Nortel was mentioned as contributing to our strong first quarter revenue number.

Specifically, Mike Z stated in the release that “Nortel had a strong first quarter, driven by the completion of a contract in our LG-Nortel joint venture and continued …

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This morning Nortel reported 1Q08 financial results.  Below are a few snippets from the official release.  More comments, news round-ups and analysis coming on this blog as we go through the day.

Again - for the full Nortel financials press release go to this link: http://www2.nortel.com/go/news_detail.jsp?cat_id=-8055&oid=100239838&locale=en-US

Revenue in the first quarter of $2.76 billion, up by 11 percent year over year, which included a release of deferred revenue associated with the completion of a significant contract in the LG-Nortel joint venture that was previously expected to occur in the second quarter.
Gross margin in the first quarter of 41.6 percent, up 120 basis points year over year
Operating margin in the first quarter of 4.7 percent, up 512 basis points year over …

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Just a quick reminder that Nortel will be announcing first quarter 2008 results first thing Friday morning.  You’ll be able to view the release from our press release page here.

Nortel’s President and CEO Mike Zafirovski and Executive Vice President and CFO Pavi Binning will host an audio webcast Friday morning at 8:30 am ET to discuss the first quarter 2008 results.  To listen in on the webcast just go to this page.  While there isn’t a webcast link there yet, it will be posted tomorrow AM for easy access.

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Nortel plans to announce first quarter 2008 results the morning of May 2, 2008.

Nortel’s President and CEO Mike Zafirovski and Executive Vice President and CFO Pavi Binning will host an audio webcast that morning at 8:30 am ET to discuss the first quarter 2008 results.

For more information visit: http://www.nortel.com/corporate/investor/events/q1earnings2008/

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As you’ve probably seen already, earlier today Nortel announced 4Q and full year 2007 financial results.  Media headlines covering our announcement have obviously focused on two main items - the $1.1B non-cash charge we took against our Canadian Deferred Tax Asset, and the announcement of further restructuring that includes a 2,100 net reduction in employees. But behind those headlines are indications that the underlying fundamentals of Nortel’s operations are trending up:

2007 revenues were up 2% YoY when you account for the divestiture of the UMTS business that happened at the end of 2006.
Nortel has now shown six consecutive quarters of strong year over year improvement in operating margin.  OM is now at the highest levels for the company since …

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