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Nortel Networks

Nortel Provides Status Update

Toronto, Canada (ots/PRNewswire)

Nortel Networks(x) Corporation
(NYSE: NT TSX:NT)  and its principal operating subsidiary, Nortel
Networks Limited ("NNL"),  today provided a status update pursuant to
the alternate information  guidelines of the Ontario Securities
Commission. These guidelines  contemplate that the Company and NNL
will normally provide bi-weekly  updates on their affairs until such
time as they are current with their  filing obligations under
Canadian securities laws.
Restatements
Change in Accounting Policy
The Company is continuing work on the current restatement of its
and  NNL's historical financial results as first announced on March
10, 2006,  which work is primarily focused on an accounting policy
change with respect  to revenue for contracts with provisions for
multiple deliverables that was  historically accounted for under the
percentage-of-completion methodology  in accordance with American
Institute of Certified Public Accountants  Statement of Position
81-1, "Accounting for Performance of Construction- Type and Certain
Production-Type Contracts" ("SOP 81-1"). Through the  restatement and
on a prospective basis, these complex contractual  arrangements will
be accounted for in accordance with Emerging Issues Task  Force Issue
No. 00-21, "Revenue Arrangements with Multiple Deliverables" (" EITF
00-21"). EITF 00-21 requires an analysis of individual contract
deliverables such as hardware, software and/or services and their
fair  value in order to determine the time pattern of revenue
recognition, in  contrast to the percentage-of-completion estimation
methodology under SOP 81-1.
As a result of this continuing work, the Company expects that in
addition to the revenue adjustments identified in the March 10, 2006
press  release, additional revenue recognized in prior periods will
be restated  and deferred to future periods. The Company will be in a
position to  determine the amounts of additional revenue deferral and
periods impacted  upon completion of this work.
Filing of Financial Statements
The Company continues to expect to file its and NNL's annual
reports on  Form 10-K for the year ended December 31, 2005 and their
corresponding  filings under Canadian securities laws by April 30,
2006.
Annual Shareholders' Meeting
The board of directors of Nortel Networks Corporation called an
annual  and special meeting of shareholders (the "Meeting") to be
held on June 29,  2006 in Toronto, Ontario. The board of directors
set the close of business  on Wednesday, May 10, 2006 as the record
date for determining the  shareholders of Nortel Networks Corporation
entitled to receive notice of  the Meeting. Details of the location,
time and agenda for the Meeting will  be included in Nortel Networks
Corporation's proxy circular and proxy  statement.
The Company and NNL reported that there have been no material
developments in the matters reported in the March 10, 2006 press
release  and their status update of March 23, 2006, except for the
Company's press  release "Nortel Announces OSC Management Cease Trade
Order" dated March 27,  2006 and the matters described above.
The Company's and NNL's next bi-weekly status update is expected
to be  released during the week of April 17, 2006.
About Nortel
Nortel is a recognized leader in delivering communications
capabilities  that enhance the human experience, ignite and power
global commerce, and  secure and protect the world's most critical
information. Our next- generation technologies, for both service
providers and enterprises, span  access and core networks, support
multimedia and business-critical  applications, and help eliminate
today's barriers to efficiency, speed and  performance by simplifying
networks and connecting people with information.  Nortel does
business in more than 150 countries. For more information,  visit
Nortel on the Web at www.nortel.com. For the latest Nortel news,
visit www.nortel.com/news.
Certain statements in this press release may contain words such as
" could", "expects", "may", "anticipates", "believes", "intends",
"estimates ", "plans", "envisions", "seeks" and other similar
language and are  considered forward- looking statements or
information under applicable  securities legislation. These
statements are based on Nortel's current  expectations, estimates,
forecasts and projections about the operating  environment, economies
and markets in which Nortel operates. These  statements are subject
to important assumptions, risks and uncertainties,  which are
difficult to predict and the actual outcome may be materially
different. Although Nortel believes expectations reflected in such
forward- looking statements are reasonable based upon the assumptions
in this press  release, they may prove to be inaccurate and
consequently Nortel's actual  results could differ materially from
its expectations set out in this press  release.  Further, actual
results or events could differ materially from  those contemplated in
forward-looking statements as a result of the  following (i) risks
and uncertainties relating to Nortel's restatements and  related
matters including: Nortel's recently announced restatement and two
previous restatements of its financial statements and related events
and  that the previously filed financial statements of Nortel and NNL
and  related audit reports should not be relied upon; the negative
impact on  Nortel and NNL of their announced restatement and delay in
filing their  financial statements and related periodic reports
causing them to breach  their public debt indentures and obligations
under their credit facilities  with the possibility that the holders
of their public debt or NNL's lenders  would seek to accelerate the
maturity of that debt; and causing a breach of  NNL's support
facility with EDC with the possibility that EDC would refuse  to
issue additional support under the facility, terminate its
commitments  under the facility or require NNL to cash collateralize
all existing  support; legal judgments, fines, penalties or
settlements, or any  substantial regulatory fines or other penalties
or sanctions, related to  the ongoing regulatory and criminal
investigations of Nortel in the U.S.  and Canada; any significant
pending civil litigation actions not  encompassed by Nortel's
proposed class action settlement; any substantial  cash payment
and/or significant dilution of Nortel's existing equity  positions
resulting from the finalization and approval of its proposed  class
action settlement, or if such proposed class action settlement is not
finalized, any larger settlements or awards of damages in respect of
such  class actions; any unsuccessful remediation of Nortel's
material weaknesses  in internal control over financial reporting
resulting in an inability to  report Nortel's results of operations
and financial condition accurately  and in a timely manner; the time
required to implement Nortel's remedial  measures; Nortel's inability
to access, in its current form, its shelf  registration filed with
the United States Securities and Exchange  Commission (SEC), and
Nortel's below investment grade credit rating and any  further
adverse effect on its credit rating due to Nortel's restatement of
its financial statements; any adverse affect on Nortel's business and
market price of its publicly traded securities arising from
continuing  negative publicity related to Nortel's restatements;
Nortel's potential  inability to attract or retain the personnel
necessary to achieve its  business objectives; any breach by Nortel
of the continued listing  requirements of the NYSE or TSX causing the
NYSE and/or the TSX to commence  suspension or delisting procedures;
any default in Nortel's filing  obligations extending beyond May 9,
2006, causing any Canadian securities  regulatory authority to impose
an order to cease all trading in Nortel's  securities within the
applicable jurisdiction or to impose such an order  sooner if Nortel
fails to comply with the alternate information guidelines  of such
regulatory authorities; (ii) risks and uncertainties relating to
Nortel's business including: yearly and quarterly fluctuations of
Nortel's  operating results; reduced demand and pricing pressures for
its products  due to global economic conditions, significant
competition, competitive  pricing practice, cautious capital spending
by customers, increased  industry consolidation, rapidly changing
technologies, evolving industry  standards, frequent new product
introductions and short product life cycles , and other trends and
industry characteristics affecting the  telecommunications industry;
any material and adverse affects on Nortel's  performance if its
expectations regarding market demand for particular  products prove
to be wrong or because of certain barriers in its efforts to  expand
internationally; any reduction in Nortel's operating results and any
related volatility in its market price of its publicly traded
securities arising from any decline in its gross margin, or
fluctuations in foreign currency exchange rates; any negative
developments  associated with Nortel's supply contract and contract
manufacturing  agreements including as a result of using a sole
supplier for key optical  networking solutions components, and any
defects or errors in Nortel's  current or planned products; any
negative impact to Nortel of its failure  to achieve its business
transformation objectives; restrictions on how  Nortel and its
president and chief executive officer conduct its business  arising
from a settlement with Motorola Inc.; additional valuation
allowances for all or a portion of its deferred tax assets; Nortel's
failure to protect its intellectual property rights, or any adverse
judgments or settlements arising out of disputes regarding
intellectual  property; changes in regulation of the Internet and/or
other aspects of the  industry; Nortel's failure to successfully
operate or integrate its  strategic acquisitions, or failure to
consummate or succeed with its  strategic alliances; any negative
affect of Nortel's failure to evolve  adequately its financial and
managerial control and reporting systems and  processes, manage and
grow its business, or create an effective risk  management strategy;
and (iii) risks and uncertainties relating to Nortel's  liquidity,
financing arrangements and capital including: the impact of  Nortel's
recently announced restatement and two previous restatements of  its
financial statements; any acceleration under their public debt
indentures and credit facilities, which may result in Nortel and NNL
being  unable to meet their respective payment obligations; any
inability of  Nortel to manage cash flow fluctuations to fund working
capital  requirements or achieve its business objectives in a timely
manner or  obtain additional sources of funding; high levels of debt,
limitations on  Nortel capitalizing on business opportunities because
of credit facility  covenants, or on obtaining additional secured
debt pursuant to the  provisions of  indentures governing certain of
Nortel's public debt issues  and the provisions of its credit
facilities; any increase of restricted  cash requirements for Nortel
if it is unable to secure alternative support  for obligations
arising from certain normal course business activities, or  any
inability of Nortel's subsidiaries to provide it with sufficient
funding; any negative affect to Nortel of the need to make larger
defined  benefit plans contributions in the future or exposure to
customer credit  risks or inability of customers to fulfill payment
obligations under  customer financing arrangements; any negative
impact on Nortel's ability to  make future acquisitions, raise
capital, issue debt and retain employees  arising from stock price
volatility and further declines in Nortel's market  price of its
publicly traded securities, or any future share consolidation
resulting in a lower total market capitalization or adverse affect on
the  liquidity of Nortel's common shares. For additional information
with  respect to certain of these and other factors, see Nortel's
securities  filings with the SEC, which have not been updated to
reflect each of these  risks and uncertainties and which include
financial information that Nortel  announced on March 10, 2006 cannot
be relied upon.  Unless otherwise  required by applicable securities
laws, Nortel disclaims any intention or  obligation to update or
revise any forward-looking statements, whether as a  result of new
information, future events or otherwise.
(x) Nortel, the Nortel logo and the Globemark are trademarks of
Nortel  Networks.
www.nortel.com

Contact:

For further information: Media - Patricia Vernon, +1-(905)-863-1035,
patricve@nortel.com; Investors - +1-(888)-901-7286,
+1-(905)-863-6049, investor@nortel.com

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