Nortel Networks Q2 Loss Widens On Reorganization Costs

As of May 31, 2010, Nortel determined that it no longer had significant influence over the operating and financial policies of the EMEA subsidiaries primarily due to the significance of the completed business divestitures.

Segment wise, revenues from Wireless Networks fell to $47.0 million from $757.0 million. Revenues from Carrier VOIP and Application Systems shrank to $89.0 million from $163.0 million. Revenues from Metro Ethernet Networks were lower at $97.0 million, compared with $333.0 million a year ago.

Gross margin declined to 4.1% from 46.5% last year, reflecting primarily business divestitures and ongoing costs related to delivery of the transition services agreements. Operating margin was negative at 82.8%, versus a positive margin of 5.89% a year ago.

The quarter

During the quarter, the company completed the divestitures of the CVAS business to GENBAND and LGN joint venture to Ericsson and recorded gains of $196.0 million in continuing operations.

Once Canada's largest telecommunications equipment maker, Nortel was hit badly by the recession and filed for protection from creditors in the United States, Canada, and the United Kingdom in January last year.