Nortel plans cost cutting moves

Nortel Networks Corp. next month plans to announce cost cutting moves in an effort to rein in operating costs and boost profits.

The company, in a biweekly performance update mandated by regulators auditing Nortel’s results going back to 2000, said that operating costs were not hitting targets of below 40 per cent of revenue. Similarly, profits margins are also below company goals of mid-40 per cent.

“In conjunction with the release of our limited preliminary unaudited results for the first and second quarters of 2004 in mid August 2004, I will provide a further update on the performance of our business and the actions that we will be taking to put into place an improved cost structure to optimize our financial performance,” Nortel CEO Bill Owen said in a statement.

Nortel also expects to file, in the third quarter of 2004, financial statements for the year 2003. The company believes a restatement of its 2003 financial results would substantially wipe out all of its net earnings for the year.

Nortel’s accounting problems first came to light late last year when the company announced that it would be restating financial results for 2000, 2001, 2002 and the first two quarters of 2003 as part of an ongoing review of its assets and liabilities.

In April, Nortel fired CEO Frank Dunn and its CFO and comptroller, and delayed its results for the first quarter of 2004, following investigations that revealed that its past accounting had been manipulated.

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