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Oct. 29, 2008

Life certainly isn't getting easier anytime soon for Nortel, especially since an analyst warned that the network equipment supplier could be facing serious liquidity issues.

UBS Research analyst Nikos Theodosopoulos said that the company will likely have to initiate more drastic restructuring efforts to sustain itself through the current global financial crisis.

He also said that Nortel could encounter some problems selling its metro Ethernet networks business.

Although the metro Ethernet division is an active category for telecom operators, the economic slowdown will likely slow revenues a lot from that market as well, the analyst warned.

In September, Nortel hinted it would sell the unit, which accounts for about 14.2 percent of all its revenue.

Nortel also said it planned additional layoffs and projected even lower revenue forecasts for at least the next three quarters.

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Source: UBS Research.