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Nortel cuts loss in fourth quarter

Networking equipment company Nortel Networks managed to narrow its loss for its 2006 fiscal fourth quarter, but warned revenues would be flat this year.

Networking equipment company Nortel Networks managed to narrow its loss for its 2006 fiscal fourth quarter, but warned revenues would be flat this year.

The Canadian firm registered a net loss of US$80million for the quarter, against a net loss of US$2.286 billion in the same quarter a year earlier.

The fourth quarter net loss included a US$164million gain on the sale of assets and a shareholder litigation expense of US$234million. The Q405 net loss included a litigation expense of US$2.47 billion.

“A relentless focus on execution in 2006 delivered solid progress on our business transformation plan and laid the foundations upon which Nortel will build its future,” Mike Zafirovski, Nortel president and CEO, said in a statement.

“There is a significant amount of work left to be done, but today Nortel is stronger than it has been in years,” he added.

While revenues rose 10% in Q4, the firm warned that it expected sales to be flat to down this year, which it attributed to its sale of its UMTS business to Alcatel-Lucent last year.

Nortel has been struggling to turn its fortunes around after it suffered an accounting crisis in 2004 that led to massive litigation costs, as well as the dismissal of several senior executives including former CEO Frank Dunn.

The US Securities and Exchange Commission (SEC) filed civil fraud charges against four former Nortel Networks executives, including Dunn, on 12 March.The SEC alleges the former executives altered Nortel’s accounts between 2000 and early 2004.

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