Nortel sees more bucks from Asia in ’04

By : |January 30, 2004 0

Jeffrey Hodgson

TORONTO: Nortel Networks Corp. chief executive Frank Dunn said the percentage of revenue the company earns outside the United States is likely to grow in the coming year.

The head of the Brampton, Ontario-based firm, one of the world’s largest telecom equipment providers, said demand from Europe for third-generation wireless phone service is likely shift more of its sales there.

“We have a very big presence in North America, but we’ve invested a lot of effort into Asia and into Europe,” the chief executive told Reuters in an interview.

“You’re going see us be more balanced. Right now we have about 52 percent of our revenue in the U.S. I think you’re going to start to see, even though the U.S. is going to be a strong market … that percentage come down.”

Dunn made the forecast after Nortel reported stronger than expected fourth-quarter earnings on Thursday and its first full-year profit since 1997.

Nortel posted net income of $499 million, or 11 cents a share, for the quarter ended Dec. 31, compared with a loss of $168 million, or 4 cents a share, a year earlier. Revenues rose to $2.83 billion from $2.53 billion.

The chief executive said the results meant he no longer had to run the business with the main focus on cutting jobs to cope with falling demand caused by the bursting of the tech bubble.

“If it’s a good business case to put more investment and more people in, I’ll do it. If it doesn’t make sense right now I won’t do it. That’s how I’m doing it. I don’t have an overall plan to grow headcount or reduce headcount,” he said.

At its peak Nortel had about 95,000 employees. It more recently said it had about 35,500.

Nortel said earlier this month it was in talks to hive off the last of its manufacturing facilities in a move that could affect about 7 percent of staff. It is negotiating with contract electronics manufacturer Flextronics International Ltd. to divest manufacturing operations in Canada, Brazil, Northern Ireland and France.

Dunn said the company decided to alert investors before the deal was completed because of the increased risk of leaks as more people with both companies got involved. He said Nortel would have had to disclose the discussions to some of its unionized staff anyway.

“Our expectation is that (completing the deal) will be a second quarter event … that’s the time frame. It’s not a number of weeks, but it’s not a number of quarters,” he said.

Dunn declined to say what the company would do with its $4 billion cash stockpile, which could be used for acquisitions, share buybacks or a dividend.

“We’re always looking to improve our business in investing and strengthening our balance sheet,” he said.

“What we’re doing is looking at all our business aspects and I’m very very cautious with how I hire people, not getting my costs out of line, and also how I spend my cash.”

Nortel’s stock closed up 17 Canadian cents at C$8.76 in Toronto before the results were released. In New York the shares were up 11 cents at $6.57.

© Reuters

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