Nortel 2006 guidance

Nortel is back in the news. Not necessarily with good news, but we enjoy hearing from an old Lady. Latest announcement was on financial results. 1Q06 is announced to be lower than expected: revenues could be flat or slightly down, and loss should be higher than last year. But, in line with its recent years habit of over-promising and under-delivering, Nortel said it is confident with achieving its revenue growth target in the high single digits for 2006, thanks to expectations of increasing demand for Nortel' s equipment. It also targets double-digit operating margins by 2008. That would mean that Nortel revenues should be around $11.4bn this year, leaving some analysts very skeptical on its chance hitting revised numbers. Nortel has underlined a new plan to reinvigorate its business, based on R&D cuts ($400m should be over-invested), re-deployment of some assets and better use of current investment. It does see, however, very little impact on its workforce. It also emphasized on some technologies it want to focus on: IPTV, Metro Ethernet, WiMAX, and IMS.

What is sure is that Nortel is back again in our order tracking for the past few weeks, with pretty interesting orders in mobile, metro Ethernet and in China. Good Luck, Nortel!