Nortel Networks, just when it seemed was on path of recovery has delayed its 10-K filing, raising doubts about the Canadian telecom giant. The delay essentially means that Nortel will restate its earnings again, and there is a good chance the delay will be in breach of NT’s $3.6 public debt covenants. NT has not been great with guidance to Wall Street, and this clearly is not good news. TheStreet.com reports that Nortel shares were up almost 30 percent for the month, but are now skidding equally rapidly.

In addition, NT is going to restate unaudited results for the year ending December 31, 2003, and some quarterly periods in 2003. This on top of the restated financial results from fiscal 2000 through mid-2003, it is not looking good for the company. I wonder why these issues are cropping up on the watch of Frank Dunn, who was the CFO before he became the CEO.

bq. “Nortel’s latest restatement will hurt the premium investors are willing to pay for Nortel in the near-term and shake investor confidence in senior management,” Schwab Soundview Capital Markets analyst Matt Hoffman, reports Globe & Mail. “The company is now cash flow positive and we would be surprised to see creditors abandoning them now,” Goldman Sachs analyst Brantley Thompson said in a report to clients. “The issue will overhang the stock over the next few months and we would wait it out.”