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Nortel reports Q4 and full year 2009 financial results |
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Nortel Networks Corporation has announced its financial results for the fourth quarter and full year 2009. Fourth quarter consolidated revenues were reported at $794 million, which excludes fourth quarter revenues of $367 million related to Equity Investees and $300 million related to discontinued operations. Nortel's selling, general and administrative expenses (SG&A) and research and development (R&D) expenses were $307 million. Consolidated cash balance as of December 31, 2009 was $2 billion. Nortel said it completed the divestiture of CDMA business to Ericsson in the fourth quarter and recorded a gain of $1.20 billion, and also completed the divestiture of ES, NGS and DiamondWare businesses to Avaya in the fourth quarter and recorded a gain in discontinued operations of $756 million. Nortel said in accordance with discussions with the US Securities and Exchange Commission (SEC), Nortel no longer combines the results of the Europe, Middle East and Africa (EMEA) subsidiaries and entities they control (Equity Investees), with its consolidated results. The Enterprise Solutions (ES) business as well as the Nortel Government Solutions (NGS) and DiamondWare businesses are presented as discontinued operations for the fourth quarter and year ended December 31, 2009. It said the CDMA business did not qualify for treatment as discontinued operations and as a result is included in continuing operations. Nortel said its overall financial performance in the fourth quarter of 2009 was impacted by continued ongoing negative economic conditions and the uncertainty created by the Company's Creditor Protection Proceedings, which resulted in a decrease in customers' spending levels, as well as the sale of the CDMA/LTE Access and Enterprise, NGS and DiamondWare businesses in December 2009. Nortel's gross margin was 38.3 percent of revenues in the fourth quarter of 2009. It said that a focus on reducing costs resulted in lower operating expenses compared to the year ago quarter, with operating expenses being $307 million in the fourth quarter of 2009 and $339 million for the third quarter of 2009. This compares to operating expenses of $469 million for the fourth quarter of 2008.  The company reported net earnings in the fourth quarter of 2009 of $1.78 billion compared to a net loss of $2.14 billion in the fourth quarter of 2008 and a net loss of $508 million in the third quarter of 2009. The net earnings in the quarter of $1.78 billion included a gain from discontinued operations of $689 million primarily related to the divestiture of the ES business to Avaya of $756 million, reorganization items of $1,263 million primarily related to the gain on the divestiture of the CDMA/LTE Access assets to Ericsson of $1,202, interest expense of $74 million, other charges of $59 million comprised in part by pension curtailment expense, $75 million in income tax expense and an expense of $1 million for earnings attributable to non-controlling interests (formerly minority interests), partially offset by other income – net of $35 million, comprised in part of a currency exchange gain of $18 million. The net loss in the fourth quarter of 2008 of $2.14 billion included $959 million in income tax expense primarily attributable to the increase in valuation allowance against net deferred tax assets, a goodwill impairment charge of $910, loss from discontinued operations of $430, interest expense of $85 million, special charges of $85 million for headcount and other cost reduction activities, earnings of $2 million for earnings attributable to non-controlling interests (formerly minority interests) and other expense – net of $43 million, comprised primarily of a loss of $46 million due to changes in foreign exchange rates. For the full year 2009, revenues were $4.09 billion compared to $7.62 billion for 2008. Nortel reported net earnings for 2009 of $488 million, compared to net loss of $5.80 billion for the year 2008. Net loss for 2009 included the amortization of intangibles of $13 million, reorganization items of $979 million primarily related to the gain on the divestiture to Ericsson, income tax expense of $75 million, a currency exchange gain of $38 million, and net earnings from discontinued operations of $201 primarily related to the gain on the divestiture to Avaya of $756 million. Net loss for 2008 included the amortization of intangibles of $21 million, special charges of $251 million, a gain on sale of business and assets of $11 million, a litigation settlement expense of $11 million, a currency exchange loss of $38 million, M&A related costs of $9 million, an investment impairment of $8 million, income tax expense of $3,193 million, a goodwill write-down of $1,571 million and a net loss from discontinued operations of $1,175. |
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