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Morgan Stanley Lowers Expectations for Nortel Networks

5:30 am on January 22, 2006 | Category: Business, Corporate

Analysts at Morgan Stanley are predicting a year of challenges for Brampton, Ontario-based Nortel Networks.

The telecom equipment maker has already seen many tough times over the past few years, including a slump in 2000, and a major accounting scandal in 2004. Since then, Nortel has emerged from the crisis, and appointed former Motorola executive, Mike Zafirovski as its new CEO.

â€œWe are confident that the new management team can improve the product portfolio over the next two years but expect 2006 to have more challenges than opportunities,â€ wrote the Morgan Stanley analysts in a research note.

The firm has reduced its revenue expectations for Nortel from $12.03 billion to $11.68 billion, and trimmed profit predictions from $0.22 to $0.17 per share.

â€œWhile we still expect cost structure improvement in 2006…we have lowered our expectations on the belief that cost-structure improvements may take longer to materialize as the new management team studies the issues and decides on a course of action,â€ the analysts wrote when explaining their decision.

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