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Nortel and Sun brighten high-tech gloom
Nortel and Sun met analysts' expectations for fourth quarter results, despite the slowdown in the IT and telecoms markets - though both predict darker days ahead.

By Ben King

Published: Friday 19 January 2001

Sun hit the 16 cents per share earnings target predicted by analysts for the quarter ending 31 December 2000. The company's net income was $552m, excluding earnings from equity investments and charges from acquisitions. The figure is 56 per cent up on the same quarter of 1999.

Nortel announced earnings of 26 cents a share for its fourth quarter, excluding charges - up from 21 cents for the same period the previous year. Charges relating to acquisitions reduced the figure to a net loss of 46 cents per share.

However, Mike Lehman, chief financial officer, confirmed the company did experience a "sudden, unexpected and noticeable" decline in demand in December and acknowledged that the weak economy may threaten revenue growth in the coming half of the year.

Nortel also acknowledged that it expects sales growth for 2001 to be around 30 per cent, at the low end of previous forecast ranges. Last week the company announced a restructuring exercise aimed at focusing on the fastest growth markets.

The telecoms and IT sectors have both been marred by profit warnings from companies citing slow sales. Apple, Compaq, Dell, Gateway, HP and Lucent have all been affected. IBM, however, has joined Sun and Nortel in bucking the trend with strong forth quarter earnings.