CS First Boston cut the estimates and target price on shares of Nortel Networks (NT).
Analyst James Parmelee says management cited a more significant sales deterioration in the U.S. and weakness in select overseas markets. He adds that the new loss estimate reflects substantial pricing pressure in a business that had formerly grown at a rapid rate (i.e. optical). Parmelee notes the magnitude of price declines indicates the pace of recovery will be slower than formerly expected. He cut the $31.8 billion 2001 revenue estimate to $27.8 billion, and cut the $0.65 2001 EPS estimate to $0.20.
Parmelee also lowered the $36.6 billion 2002 revenue estimate to $32 billion, and the $0.85 2002 EPS estimate to $0.70. He cut the $40 target price to $25 and maintained his buy rating.