Over-optimism expected to hurt Nortel's first quarter results

The perils of over-supplying are expected to be demonstrated in Nortel Networks first quarter results next week.

A downturn in the global telecommunications industry is expected to make itself felt on the company's revenues.

Analysts predict the group with show a tapering off from last year's 42% increase in revenues.

Net loss last year showed a dramatic leap from £244m to £2.4bn.

Close attention will be paid to Nortel's efforts to lower its cost structure and its inventories, after its expectations for strong demand in 2001 led the company to boost capacity in the already over-supplied telecom equipment industry.

The company previously announced plans to cut 15,000 jobs this year, in line with jobs culls throughout the industry.

A Nortel spokesman says the group expects first quarter revenues of between £4.2bn and £4.3bn.