Nortel widens loss on weaker CDMA demand

04 Aug 2008

Nortel's stock fell nearly 15% on Friday after it revealed a wider loss for the second quarter, becoming the second vendor in a week to feel the impact of weaker demand for CDMA equipment.

The Canadian firm recorded a net loss of $113 million, compared with a $37 million deficit in Q2 last year.

Compared with the same period last year, orders were "primarily impacted by lower CDMA orders in North America and lower orders from the LG-Nortel joint venture," Nortel It announced on Friday.

"Nortel faces a challenging business environment with increasing risk due to general macro-economic weakness, continuing competitive pressures and potential of further reduced capex spending by key North American CDMA customers," the company said.

Revenue was down 5% year on year to $2.62 billion. However, sales were up in all divisions except the carrier group, the largest segment by revenue, which saw a 2% decline to $1.04 billion. The services group saw a 9% rise to $536 million.

Despite the tough outlook, CEO Mike Zafirovski said Nortel was on track to meet guidance for the year.

Last week Alcatel-Lucent fired its chairman and CEO after a $1.7 billion quarterly loss, primarily as a result of weaker CDMA demand in North America.

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