Nortel cuts costs as 2008 loss nears $6bn

Nortel's eased its Q4 pressure with a decline in operating expenses

Embattled communications vendor Nortel partially offset a 15 per cent drop in sales by slashing operating expenses by double that amount during 2008's closing quarter.

Revenue for the three months to the end of December was down by 15 per cent year on year to $2.72bn (£1.9bn). Various non-cash charges amounting to $2.19bn (£1.55bn) saw the company slump to a net loss of $2.13bn (£1.5bn) during Q4.

Revenue for the whole of 2008 fell back five per cent year on year to $10.42bn (£7.4bn). Net loss for the entire year stood at $5.8bn (£4.1bn), a more than sixfold increase on 2007's losses.

Nortel's fourth quarter pain was partially soothed by a decline in operating expenses, which fell 30 per cent year on year and 10 per cent sequentially. These have been driven by the firm's ongoing restructuring and Nortel announced chief financial officer Pavi Binning has also been appointed as chief restructuring officer. The firm announced last week a further 3,200 positions are to be axed worldwide.

Chief executive Mike Zafirovski said: "As Nortel continues to work through a complex global restructuring of its business, our focus remains firmly on maintaining high customer service levels for on time delivery, network stability and responsiveness. In parallel, appropriate investments continue to be made in order to deliver the R and D and technology leadership that our customers require.

"At every level, our employees are working hard in an extremely difficult environment to deliver on our customer commitments and drive our business forward. Work is taking place across Nortel to develop a comprehensive plan to restructure Nortel into a more focused, leaner and more competitive company."