Nortel makes $507m loss during first quarter

CEO confirms that talks are taking place about sale of business

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By  George Bevir Published  May 12, 2009

The CEO of Nortel has confirmed that the company is in talks with several companies about a sale of some or all of the Canadian telecommunications equipment manufacturer’s businesses.

It was revealed yesterday that the struggling vendor made a US$507 million loss during the first quarter of the year, compared to losses of $138 million during the same period in 2008.

Revenues in the first quarter were $1.73 billion, down by 37% year-on-year, with declines in all segments and regions. Excluding the negative impact of currency fluctuations the decrease would have been 29%.

In a statement, Nortel chief executive officer Mike Zafirovski said: "First quarter results showed a decline in revenue and margins as expected due to the severe economic downturn and our filings for creditor protection.” He added that despite the declines revenue had “stabilised”.

In January, Nortel filed for Chapter 11 bankruptcy in the US to allow it to repay debts while a reorganisation of the business took place.

It claimed to be a victim of the global economic downturn, blaming the creditor protection order on “the rapid and significant downturn in the global economy and credit markets”.

The vendor is currently in the process of transforming each of its divisions into standalone businesses in preparation for them to be sold off.

Zafirovski said: “Discussions are taking place with various external parties, however, decisions have not been taken and we continue to evaluate our restructuring alternatives.”

The Financial Times reports that a source close to the discussions has confirmed that Nokia Siemens Networks has made a bid for the core network carriers part of the business.

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