Friday, bankrupt Canadian network solutions company Nortel Networks Corp. (NRTLQ.PK) reported a profit in the fourth quarter, reflecting significant gain from sale of assets and cost reduction activities, compared to a loss last year.
Nortel Networks, that find it difficult to thrive in the financial turmoil and filed for bankruptcy protection in January, reported fourth quarter net profit of US$1.78 billion or US$3.34 per share compared to a net loss of US$2.14 billion or US$4.28 per share in the prior year quarter.
Net income from continuing operations for the quarter was US$1.1 billion or US$0.69 per share compared to a loss of US$1.71 billion or US$3.42 per share in the year ago period.
The profit for the quarter include a gain from discontinued operations of US$689 million related to the divestiture of the ES business to Avaya, reorganization items of US$1.26 billion related to the gain on the divestiture of the CDMA/LTE Access assets to Ericsson.
Prior year quarter was hurt by income tax expense of US$959 million due to the increase in valuation allowance against net deferred tax assets, a goodwill impairment charge of US$910 million and loss from discontinued operations of US$430 million. Further, the previous year were dented by interest expenses of US$85 million and special charges of US$85 million towards job cuts and cost reduction activities.
The company noted that ongoing negative economic conditions and the uncertainty created by its Creditor Protection Proceedings 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.
Fourth quarter total revenue plunged to US$794 million from US$2.07 billion in the comparable quarter last year. These revenues exclude fourth quarter revenues related to Equity Investees of $367 million and $300 million related to discontinued operations.
Gross margin for the recent quarter declined to 38.3% from 41% last year. Total operating expenses were reduced to US$371 million from US$1.4 billion in the year-ago quarter, resulting from a drop in SG&A expenses to US$158 million from US$233 million and decline in R&D expenses to US$149 million from US$236 million in the prior year quarter.
The company posted significant decline in revenues across its segments. Wireless Networks revenues were down 67% from the prior year at US$375 million, while Carrier VoIP reported a revenue of US$194 million, a decrease of 27% from the prior year. Sequential decline for Wireless Network was 43%. Metro Ethernet Networks' revenue was US$327 million that declined 29% from the previous year. LGN reported US$154 million revenue, with an year over year decline of 24% and a sequential fall of 50%.
For the fiscal 2009, the company reported net income of US$488 million or US$0.96 per share compared to a net loss of US$5.7 billion or US$11.64 per share in the prior year. Revenue increased to US$4.1 billion from US$2.1 billion a year ago.
NRTLQ.PK last traded at US$0.05, up US$0.01 or 25% on a volume of 13.13 million shares.
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