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Nortel drops in Europe trading

NORTEL Networks Corp, North America's biggest maker of phone equipment, plunged in European trading after the Globe and Mail reported that the board met Tuesday night to deal with a "financial crisis."

Nortel was expected to file for bankruptcy protection in Toronto and an undisclosed United States location as early as yesterday, the newspaper reported, citing people working with Nortel and its creditors. The Toronto-based company faces a US$107-million interest payment today, the newspaper said.

In German trading, Nortel fell as much as 5.93 US cents, or 19 percent, to the equivalent of 26.07 US cents, from the close of 32 US cents in the United States on Tuesday. The stock traded at 31.12 US cents as of 11:22am in Frankfurt. The stock lost 24 percent in New York Stock Exchange composite trading on Tuesday.

Since Chief Executive Officer Mike Zafirovski took over in 2005, the company has lost almost US$7 billion. Nortel, whose predecessor was founded more than a century ago, has lost 97 percent of its market value in the past year as customers spent less and switched to newer technology from Cisco Systems Inc and other rivals, Bloomberg News said.

Zafirovski had sought to revive Nortel's fortunes by cleaning up the balance sheet and reducing the workforce by 18 percent since he started.



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