Stung by Negative Press, Nortel Provides a 'Clarification'
Posted March 14, 2006
RESEARCH TRIANGLE PARK, NC — Stung by a barrage of negative reporting,
took the unusual step late Monday night of issuing a "clarification" regarding the restatement of earnings it announced on Friday.
"The Company wishes to clarify that Nortel's internal and external auditors have not undertaken an investigation as to whether any improper conduct may be associated with the need to effect the latest restatement," Nortel said in a press release.
In a conference call on Friday, Nortel announced a review of contracts discovered that some revenues would have to be rebooked. Thus the firm would delay filing its annual report for 2005 and also restate earnings back to 2003. This is the third time Nortel has had to restate earnings since 2003.
However, the restatement this time is not linked to the firing "for cause" of several executives in an earlier review.
Nortel went out of its way in the statement to stress lack of "any wrongdoing" found in this review.
"The internal and external reviews referenced in the press related to an extensive contract review that was undertaken as part of remedial efforts relating to internal control deficiencies," Nortel explained in comments not attributed directly to any specific person from management. "While the Company has not become aware of any wrongdoing as a result of this extensive contract review, and none was apparent, this review was not focused on conduct matters. The Company will continue to examine this aspect.
Nortel (NYSE: NT) fell 4 cents to close at $2.98 in trading Monday.