September 22, 2016
Nortel’s share price plummeted this week after the company slashed its projected revenues for the third quarter to $2.3 billion, down 14% on year.
Projected yearly revenues for North America’s biggest maker of telecoms equipment were also down on year at $10.8 billion, 4% lower than last year, and 6% down on analysts forecasts.
Shares in the Toronto-based company fell 49.5% following the announcement, to their lowest price in almost three decades.
Nortel has been hit hard by the turmoil in the world’s financial markets.
Global economic slowdown has led to spending cuts in the telecoms industry with Nortel’s core customers, telephone network providers, cutting back on infrastructure spending.
The slump has now spread outside the US, with customer spending on telecoms slowing down in Europe and Asia.
Nortel’s CEO Mike Zafirovski was appointed three years ago to turn around the company’s fortunes. Since then, he has axed 4,000 jobs.
Despite his no nonsense approach, total losses with Zafirovski at the helm total $3.5 billion, and he has resolutely refused to sell off units despite calls for him to do so.
Analysts have written off Zafirovski’s strategy as ‘flawed’, and say that anything he does now will be too little too late.
George Riedel, chief strategy officer at Nortel, has revealed that the company is in ‘early talks’ with a number of potential buyers.