Nortel CEO Mike Zafirovski told analysts yesterday the company will post "some of the best results in Nortel’s history" by 2008. So what does he see that investors don’t given Nortel shares touched their lowest level yesterday since late-2002? How can he be so bullish at a time of fierce competition and lower margins within the telecom equipment market, as well as Nortel’s disappointing first-quarter results? Some of Mike Z.’s optimism about profits and operating margins may have to do with the dividends of fixing Nortel, which is undergoing a massive strategic, cultural and operational overhaul under his leadership. You get the impression the ex-Motorola COO believes there is a lot of low-hanging fruit to be picked before any of the really tough questions (such as whether to sell low-performing units or merge Nortel with Nokia or Siemens) have to be answered. For investors, do you buy into Mike Z.’s bullishness and pick up a few Nortel shares, or wait on the sidelines given the company’s recent over-promise and under-deliver history?
Why is Mike Z. So Optimistic?