According to Forbes.com, RBC Capital Markets analyst Mark Sue has dropped his 12-month stock price target on Nortel to $3 from $3.50 due to concerns the growth of the company’s CDMA business, which accounts for 50% of its wireless sales, has already peaked. Among Sue’s concerns is the migration from CDMA to GSM by carriers such as Brazil’s Vivo – a trend spurred on by suppliers such as Ericsson and Huawei. Sue said a financial and strategic challenge facing Nortel is CDMA still generates significant amounts of revenue and cash flow from customers such as Verizon and Sprint Nextel. Speaking of GSM, Rogers Wireless is celebrating its fifth anniversary with the technology.
What should go along with this concern is the dwindling support of CDMA by handset manufacturers. Nokia is dropping their CDMA lines; the very popular Blackberry 8700 only supports GSM and its related data protocols. Nortel’s dependence on CDMA is probably one lingering aspect of when it was a subsidiary of Bell Canada; Bell Mobility is a CDMA operator.
Analyst Concerns About CDMA
According to Forbes.com, RBC Capital Markets analyst Mark Sue has dropped his 12-month stock price target on Nortel to $3 from $3.50 due to concerns the growth of the company’s CDMA business, which accounts for 50% of its wireless sales, has already peaked. Among Sue’s concerns is the migration from CDMA to GSM by carriers such as Brazil’s Vivo – a trend spurred on by suppliers such as Ericsson and Huawei. Sue said a financial and strategic challenge facing Nortel is CDMA still generates significant amounts of revenue and cash flow from customers such as Verizon and Sprint Nextel. Speaking of GSM, Rogers Wireless is celebrating its fifth anniversary with the technology.