Troubled Nortel shares fall after announcing job cuts, revenue shortfall

<br>TORONTO (AP) _ Nortel Networks shares skidded Wednesday after the Canadian fiber optics giant disclosed plans to cut another 7,000 jobs, or 16.6 percent of its work force, by the end of 2002 and forecast

Wednesday, August 28th 2002, 12:00 am

By: News On 6

TORONTO (AP) _ Nortel Networks shares skidded Wednesday after the Canadian fiber optics giant disclosed plans to cut another 7,000 jobs, or 16.6 percent of its work force, by the end of 2002 and forecast lower revenue than expected for the third quarter.

In order to return the one-time industry leader to profitability in 2003, president and chief executive Frank Dunn said after the stock markets closed Tuesday that Nortel will reduce its work force to 35,000 by the end of the year from about 42,000 projected for the end of September.

The company expects revenue for the third quarter would be down 10 percent from the second quarter figure of $2.77 billion to continued low spending by communications providers in the United States.

Nortel originally projected revenue for the quarter ending Sept. 30 would be ``essentially flat'' compared to the second quarter.

Nortel shares were down 17.9 percent, or 22 cents, at $1.01 in morning trading Wednesday on the New York Stock Exchange. The company had 96,000 employees and a share price of about $80 in 2000.

It was the latest in 18 months of poor results for Nortel, which lost $697 million in the second quarter and $841 million in the first quarter of this year after reporting a 2001 loss of $27.3 billion.

In the statement, Dunn said Nortel planned to return to profitability by the end of June 2003.

The statement said Nortel had sufficient cash to handle the revenue crunch without using existing credit lines. Nortel spokeswoman Tina Warren said the company had a cash balance of $4.8 billion at the end of the second quarter, up from $3.1 billion at the end of the first quarter.

In May, Nortel announced it would cut 3,500 jobs to bring its work force down to 42,000 by the end of September.

Nortel faces class-action lawsuits filed last year in Canada and the United States that accuse executives of putting out false and misleading statements that artificially inflated share prices prior to a profit warning issued in February 2001. The lawsuits seek to recover losses suffered by individual and institutional investors who purchased Nortel shares before the profit warning.