Nortel stock dips as quarterly loss reach $37m

Nortel Networks swung to a loss in the second quarter on charges and after booking a major legal gain last year, an Associated Press report said.

The Toronto-based company reported a loss of $37 million, the report said.

The Associated Press report said the latest quarter included a series of items: a $36 million restructuring charge; a $35 million charge related to a regulatory issue; a $69 million gain on favorable foreign exchange rates, and a $10 million gain from the sale of assets.

Nortel did not provide charge-adjusted results, the report said.

The year-ago period included a $510 million shareholder litigation recovery; $49 million in restructuring charges, and $12 million charge related to the sale of assets, the report said.

Revenue fell 8% to $2.56 billion from $2.78 billion last year, missing Wall Street's forecast of $2.75 billion, the report said.

Nortel stock fell $1.36, or more than 6 %, to $20.38 in afternoon trading in New York.

The shares have traded in a range of $19.3 to $31.79 over the past 52 weeks.

The report said CEO Mike Zafirovski attributed the revenue shrinkage to the divestiture of Nortel's UMTS Access business. Adjusted for this, he said, revenue was down 1%, principally because of the timing of contracts.

Although Zafirovski said in a conference call that he believed good progress is being made to reshape Nortel, he also warned that the full-year operating profit margin now is expected to be at the lower range of what executives had said previously, of 5% or higher.

He confirmed previous projections of full-year revenue being 'flat to slightly down' despite strong momentum with customers, which has produced sales of both existing products and new technologies, the report further said.