One other issue raised by Charter Equity analyst Edward Snyder in today’s Toronto Star is that Nortel’s CDMA business could be its “shining star” even though CDMA appears to be losing the standards battle against GSM. In what appears to be a strange thesis, Snyder said Alcatel-Lucent could lose CDMA market share or abandon the business if their merger goes poorly – even though it will be the dominant market leader when the merger is approved. “If Lucent and Motorola get out of CDMA, who’s going to get that share?,” he said. “Probably Nortel. Nortel could end up the king of the hill for the CDMA infrastructure business that nobody thinks is growing. It could be hugely profitable.”
Is Nortel finally beginning to show signs of a re-birth? given all the latest news in the past week and in my opinion most if not all positive. Things are looking up for the next quarter.
Comments folks ….
Jack
It’d be suicidal for either the Alcatel-Lucent, OR Lucent if the merger falls through, to give up their leadership of the CDMA business, DESPITE THE FACT that CDMA business IS shrinking. The analyst comment is unrealistic.
The bottom line is that Nortel is showing no signs of winning any business of significant volume. It’s showing signs of a death-bed patient, not of re-birth.
Ross
I have to agree with Jack. What are they smoking? Lucent, whether in or out of a ‘merger’ with Alcatel, is not going to forfit their substantial, and hugely profitable lead in CDMA! It may be shrinking, but it is still a much more profitable business than GSM or UMTS.
Nortel has not significantly altered their position in this business from day one. There is nothing to suggest any change. As CDMA looses ground to GSM/UMTS, Nortel margin issues will grow. If Lucent somehow ends up outside of Alcatel, they will have even bigger troubles. If they stay the course with Alcatel, their margin challenges will become diluted, and Nortel will stand out like a sore thumb!
Snyder: Part II
One other issue raised by Charter Equity analyst Edward Snyder in today’s Toronto Star is that Nortel’s CDMA business could be its “shining star” even though CDMA appears to be losing the standards battle against GSM. In what appears to be a strange thesis, Snyder said Alcatel-Lucent could lose CDMA market share or abandon the business if their merger goes poorly – even though it will be the dominant market leader when the merger is approved. “If Lucent and Motorola get out of CDMA, who’s going to get that share?,” he said. “Probably Nortel. Nortel could end up the king of the hill for the CDMA infrastructure business that nobody thinks is growing. It could be hugely profitable.”