Earnings warning season came in like a lion for Canadian tech stocks. Nortel Networks issued a massive earnings warning this morning.

The networking giant forecasts a second-quarter loss of US$19.2 billion. Included in the huge loss is a US$12.3 billion charge to write down acquisitions. As well, Nortel is cutting another 10,000 jobs on top of the 20,000 that have already been cut.

All this comes after JDS Uniphase Corp. issued its own earnings warning after the bell last night. It lost about 15% in the pre-market, and Nortel looks to drop a similar amount today.

On top of this, 360networks announced it will not make a US$10.9 million interest payment due today, although under the terms of the debt it has another 30 days to make the payment in order to avoid default.

The company says it is not making this payment to preserve cash as it reviews its options. It has also abandoned discussions with current shareholders and others to resolve its funding issue and is now concentrating on other alternatives, including restructuring. It has retained Lazard Freres to assist in this process.

On top of the earnings news, the economic scene is looking a little dodgy, with inflation building. The U.S. Consumer Price Index came in up 0.4% in May, its fastest pace in four months.

Our Consumer Price Index was also reported up at a 3.9% annual rate in May. This surpasses April’s rise of 3.6%, and is the largest increase since November 1991.

Energy prices remain a driving force behind these gains, accounting for more than one-third of the All-items annual increase. Excluding energy the CPI rose 2.7% in May, this is smaller than April’s annual increase of 2.8%, but still higher than March’s 2.3% rise.

European stocks are sliding, thanks to Nortel and JDS. Techs are getting hammered. The prospect of a trade war with the U.S. over the EU’s opposition to General Electric Co.’s proposed US$45 billion acquisition of Honeywell International Inc. isn’t helping either. The FTSE is down 65 points to 5,687. The CAC 40 has dropped 76 points to 5,221. The DAX is down 105 points to 5,926.

Overnight in Asia, stocks slumped too. The Nikkei shed 56 points to 12,790. The Hang Seng dropped 146 points to 13,102.

In other news, Celestica Inc. announced that it is buying Omni Industries of Singapore for 0.045 subordinate voting shares of Celestica for each Omni share. There is also a cash option up to S$860 million in total cash.

Trican Well Service Ltd. is announcing the expansion of its 2001 capital budget. Based upon higher than expected demand for services, Trican is increasing its capital budget by $20 million to bring the total budget for the year to $43 million.