Nortel's Enterprise Solutions Suffered Most In Q4

And Nortel's Enterprise Solutions division, which was to be the Toronto-based vendor's saving grace when the dust settles, was hit hard, suffering a 30 percent year-over-year decline in the third quarter, dropping revenue to $535 million.

Overall for the fourth quarter, Nortel reported a net loss of $2.135 billion, compared to a net loss of $844 million in the fourth quarter one year earlier. Nortel's quarterly revenue dropped to $2.72 billion, a 15 percent slip from the $3.2 billion in the fourth quarter of 2007.

Nortel's enterprise business is its second largest division in terms of revenue, and an area Nortel hoped would revive sales and help it emerge strong from its recent months of peril, one of the darkest period in Nortel's history.

Nortel said in a statement Monday that its weak enterprise sales were due to "lower volumes in all businesses and geographies and unfavorable effects of foreign exchange."

Nortel did not host an earnings call to announce the fourth-quarter results and instead issued a press release on its corporate Web page.

Nortel's Enterprise Solutions group, while suffering the biggest loss in the fourth quarter, was not the only division to suffer. Nortel's Carrier Networks business saw an 8 percent drop to $1.23 billion, Nortel's global services revenue tumbled 12 percent to $530 million and its Metro Ethernet Networks division, which Nortel was actively shopping around for acquisition, saw revenue slide 14 percent to $371 million.

Nortel CEO Mike Zafirovski said the quarter presented some positive news.

"The fourth quarter revenues decreased 15 percent as the market continued to deteriorate and customers either reduced or deferred spending," Zafirovski said in a statement. "However, strong operating performance focused on customers, costs and cash resulted in meeting or exceeding guidance for management operating margin and cash. The management operating margin was the highest since 2000, key customer performance and quality metrics were also at multi-year highs, and our fourth quarter operating expenses were down 30 percent from the prior year."

Zafirovski continued: "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&D and technology leadership that our customers require."

Nortel filed for Chapter 11 bankruptcy protection in January after a series of public missteps and amid floundering revenue. In November, Nortel posted $3.4 billion in losses for the third calendar quarter, its largest loss in seven years, and said it planned to slash 1,300 jobs, impose a salary freeze and continue its already-in-place hiring freeze.

Last month, Nortel said it was planning to sell off its Layer 4 through Layer 7 application delivery portfolio to Tel Aviv, Israel-based application delivery and security vendor Radware as part of its restructuring process.

Nortel's current state is in sharp contrast to the ambitious turnaround plan it launched in 2005 when Zafirovski joined. That plan struggled under slumping revenue, and over the last four years Nortel has chopped roughly 18 percent of its workforce and went about $4.5 billion into debt.

Just last week, Nortel slashed 3,200 more jobs as part of its ambitious restructuring effort. The latest layoffs put Nortel's workforce at around 30,000, a dramatic drop from the more than 90,000 employees it boasted in 2001.