Nortel has released their Q4 and 2007 results and from the looks of it they are still in the “transformation” stage of restructuring. From a shareholder perspective Nortel for the year 2007 has come up shy by $957 million, or $1.98 per common share.
President and CEO Mike Zafirovski said “Nortel continued to make strong progress in the fourth quarter as we completed a pivotal year in our transformation. In a period of significant change for our industry, we have now reported six consecutive quarters of strong year over year improvement in operating margin. Significant progress has been made while upholding the highest standards of ethics and integrity. We have increased our profitability, improved organizational effectiveness and enhanced our competitiveness in the market. I am particularly pleased with the attainment of double digit productivity, which contributed to our gross margin improvements, and by our ability to shift significantly more R&D investments into growth and emerging new areas while reducing the overall R&D spend. These accomplishments provide us with the capability and foundation upon which to build a successful business that delivers value both to customers and to shareholders.”
- Q4 revenue $3.20 billion (down 4% year over year) and was $10.95 billion for the full year (down 4%)
- Gross margin in Q4 of 43.7 percent, up 386 basis points year over year and 42.1 percent for the full year 2007, up 327 basis points.
- Operating Margin(a) in the fourth quarter of 7.6 percent, was 339 basis points better year over year and was 3.7 percent for the full year, up 369 basis points.
- Nortel’s 4G wireless technologies were highlighted with Verizon’s decision to trial LTE (Long-Term-Evolution) technology. Nortel also demonstrated the industry’s first WiMAX VoIP Call over a 2G/3G voice network, allowing wireless service providers the efficiency and simplicity of offering advanced voice and data capabilities without replacing existing networks.
- More than 20 trials and contracts have been signed for Nortel’s 40G solutions, including Verizon Business who wanted to find a simple and cost-effective way of delivering greater capacity to its large enterprise customers across Europe.
Nortel provided its outlook for the full year 2008:
- Revenue to grow in the low single digits compared to 2007
- Gross Margin to be about our business model target of 43 percent of revenue
- Operating Margin as a percentage of revenue to increase by about 300 basis points compared to 2007
Nortel expects to implement a net reduction of its global workforce by approximately 2,100 positions and in addition move approximately 1,000 positions to higher growth and lower cost geographies