Nortel Sees Q3 Revenue Down, Will Sell Metro Ethernet Unit

Nortel Networks lowered its revenue expectations for the third quarter on Wednesday, blaming delays in delivering certain products, and said it will consider selling its metro Ethernet networking business

The metro Ethernet business is in need of consolidation, Nortel said, and selling the division will provide funds for further restructuring to cut costs and maintain margins.

Nortel will continue to invest in research and development of metro Ethernet products while it looks for a buyer for the division, and will maintain its timetable for introducing new products, it said.

Nortel now expects third-quarter revenue to total around US$2.3 billion, a drop from $2.7 billion in the third quarter last year.

Performance for the rest of the year will also be lower than expected, Nortel said, as carriers are cutting their capital expenditure plans and some enterprise customers have deferred investments in IT and optical networks. It expects full-year revenue to drop by between 2 percent and 4 percent compared to last year, whereas in August it forecast that it would grow by a similar percentage.

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