Nortel posts loss in Q1; Bell, union back talking

Nortel Networks continues to show roller coaster financial results, posting a loss in the first quarter of 2008 of US$138 million.

That was worse than the $103 million (all figures in U.S. dollars) the company lost in the same period a year ago, the Toronto telecommunications manufacturer said Friday. I

It was the second consecutive quarterly loss for the company after showing a profit in the third quarter of 2007. In February it announced more job cuts following a loss of $957 million for 2007.

Still, it tried to put a positive spin on the results, saying revenue for the quarter of $2.76 billion was up 11 per cent over the same period a year ago. Gross and operating margins were also up.

“Nortel had a strong first quarter, driven by the completion of a contract in our LG-Nortel joint venture and continued improvements in gross and operating margins,” president and CEO Mike Zafirovski said in a statement.

“Nortel’s operating margin, a critical measure of our plan’s traction, expanded for the seventh consecutive quarter year over year, recording a 512 bps (basis points) improvement to 4.7 per cent.

“We expect to achieve our full year guidance and we continue to make solid progress against the strategy to turn around the company. Our relentless focus on execution and our determination to deliver value to customers is strengthening the foundation upon which to build our performance over the balance of 2008 and beyond.”

Revenues from sales of carrier and enterprise equipment were up, as was revenue from services. However, revenues from sales of Metro Ethernet gear were down 12 per cent compared to a year ago. Nortel said that was primarily due to decreases in optical and data revenue resulting from the completion of large contracts in the first quarter of 2007 not repeated to the same extent in the first quarter of 2008.

Bell, union back at bargaining table

Bell Canada and the union representing some 5,000 craft and services workers are back at the negotiating table after workers rejected a second offer from the company. Federal mediators are working with the two sides in an effort to help them hammer out a new deal. On April 23 the 5,000 members of the Communications, Energy and Paperworkers (CEP) Union who work at Bell in Ontario and Quebec – which include technicians – tossed out the company’s second offer by a 59 per cent majority. An earlier offer was rejected by a larger margin. In a news release at the time John Edwards, the union’s administrative vice-president for Ontario and a member of the bargaining team, complained Bell is demanding clawbacks from the CEP, including lengthening the work week from 37.5 to 40 hours, and reducing and eliminating certain bonuses. Negotiations have been going on since October. The union is in a squeeze because Bell could be privatized in a few weeks under a consortium lead by the Ontario Teachers Pension Plan. It has told its members that if a contract is not reached Bell has the legal authority to lock them out or impose a deal. The union has a strike mandate.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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