Nortel falling further behind
11 October, 2004

According to a new report from Technology Business Research (TBR), the rough ride for Nortel Networks continues. While still a viable competitive force in the telecommunications market, Nortel is about to undergo yet another reorganization and downsizing. This time, internal forces rather than industry dynamics are forcing the company's hand.
With nine months of the year over, Nortel has yet to officially report its financial results for any quarters in 2004. While government regulators have given the company extended grace periods to determine its final figures, preliminary estimates are already forcing Nortel to take strategic action. TBR believes operating margins are declining from 11.4% in 4Q03 to just 2% in 2004, causing Nortel to once again downsize. By the end of 2004, the company expects to reduce its workforce by 10% or approximately 3,500.

Although Nortel is not expected to file results for the first and second quarters of 2004 until the end of the October, the company released preliminary unaudited figures for sales and expenses that are subject to change.

TBR believes Nortel's internal financial issues have effectively turned back the clock, causing the company to initiate another reorganization and recovery period similar to those implemented during the industry downturn. Nortel is likely to remain viable despite this action, but it will lose precious time and market position to competitors who have already emerged from their own restructuring and are gearing up for growth.

For the full report, please visit www.tbri.com

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