You had to know it was only a matter of time before Nortel restated its results again, right? Nortel and its principle operating unit, Nortel Networks Ltd., will restate their financial results for 2004, 2005 and the first nine months of 2006, and will make adjustments to periods prior to 2004. So, what’s up? Apparently, it has to do with third-party errors related to employee benefit plans and – surprise, surprise – timing errors on the recognition of revenue.
“This restatement has no material impact to our fourth quarter 2006 operating expectations or performance, ” said CFO Peter Currie, who’s leaving the company next month after abruptly announcing his resignation a few weeks ago. “During 2006, we have implemented significant remedial measures and other actions to address our internal control weaknesses. This has resulted in a substantial reduction of control weaknesses as at year end and represents a major milestone in our journey toward consistent, reliable and timely financial reporting.”
While the restatement is relatively minor, it’s certainly not a positive sign for a company that appeared to be gaining its footing again and more confidence from investors. Nortel said it expects revisions to its previously reported 2006 nine month results that will boost revenues and improvements in net earnings by about $24 million and $15 million, respectively. Its 2005 results will decline by $28-milion while losses will climb by $87-million. Revenue in 2004 will rise by $33-million while the net loss will increase by $42-million.