“In posting one of the largest quarterly losses in corporate history, Nortel Networks Corp. sent a clear signal that any turnaround in the global telecommunications-equipment sector will take much longer than previously thought,” the Wall Street Journal is reporting today.

“Citing a ‘disastrous’ downturn in telecommunications spending, the big telecom-gear maker warned of a second-quarter loss of about $19.2 billion — yes, billion — albeit mostly due to various one-time charges. The company plans to report a big loss from operations of about $1.5 billion.

“Nortel also said it is taking drastic measures to conserve its rapidly depleting cash reserves, including increasing job cuts by 10,000 to 30,000, canceling its dividend and shutting unprofitable business units.

“Nortel’s expected loss of $19.2 billion is ‘the biggest ever,’ except for a slightly larger loss reported by General Motors Corp. about 10 years ago, but that was due to pension-related accounting changes, said Chuck Hill, director of research at Thomson Financial/First Call.

“The news rattled the telecom sector, as shares of Nortel fell to a new 52-week low and other telecom stocks, such as Lucent Technologies Corp., also fell. Nortel Chief Executive John Roth squelched any optimism that the sector is due for a turnaround by saying the slump ‘seems to be becoming a world-wide trend’ and that ‘meaningful growth’ in equipment spending by carriers isn’t likely before the second half of 2002.

“That is a marked turnabout from earlier this year, when Nortel offered some hope by saying carrier networks were gradually filling with data traffic and could require new equipment to boost capacity later this year.

“Instead, carriers are ‘finding that they can squeeze more capacity out of existing equipment’ and lease capacity from other carriers when necessary, Mr. Roth said. He characterized the company’s problems as the result of a complete reversal of the network-building spree telecom carriers went on in recent years.

“Though Nortel’s business had turned sharply lower since the start of this year — as had its shares — the company outlined the heightened urgency of its situation with moves announced Friday.