Bernanke Talks; Nortel Plunges

123jump.com Staff
27 Feb, 2008
New York City

U.S. stocks edged higher as the Fed Chairman gave his assessment to U.S. lawmakers. The comments appear to support growth and less concerned about inflation and support for the currency. Dollar traded at another low against the Euro as investors worried that the Fed will lower rates in the coming weeks. Nortel plans to reduce 2,100 staff and relocated 1,000 jobs to lower cost regions. Nortel fell 10% after reporting larger than expected loss.

[R]11:00AM New York – U.S. stocks edged higher as market listened to the Fed Chairman testimony.[/R]

U.S. stocks edged higher after comments from the Fed Chairman Ben S. Bernanke. The Chairman in semi-annual testimony before the House Finance Service Committee said that the Fed will act in a timely manner to sustain growth. The talks of supporting economic growth were interpreted by the market that the Fed is open to another rate cut in the next meeting.

The Fed appears to be in a tight spot and several economists have worried that the Fed may be facing slowing economy and rising inflation. The Fed may not be able to change the course of events if the current credit market malaise persists.

Nortel ((NT)) telecom equipment company stock fell nearly 10% after it reported larger than expected loss.

Revenue in the fourth quarter declined 4% to $3.20 billion and was $10.95 billion for the full year, down 4%. Excluding certain one-time items, revenues increased 2% for the quarter and for the year. Revenues in the third quarter increased 18%.

The company plans to reduce its global workforce by 2,100 people and move additional 1,000 people to ‘lower cost geographies’. The company hopes to achieve 70% of these reductions by the end of 2008.

The Company reported a net loss in the fourth quarter of 2007 of $844 million, or $1.70 per share on diluted basis, compared to net loss of $80 million, or $0.19 per share, in the fourth quarter of 2006 and net income of $27 million, or $0.05 per share, in the third quarter of 2007.

Operating margin was 7.6 percent in the fourth quarter of 2007, compared to 4.2 percent for the fourth quarter of 2006 and 5.0 percent for the third quarter of 2007. Fourth quarter of 2007 Operating Margin was the highest in 12 quarters.