Nortel: We’re Acquisition-Friendly

By Mark Evans | Published: October 13, 2006

Hmm, I wonder what this means:

“If there’s a good opportunity that makes strategic and economic sense for us … we don’t feel constrained to act on it,” – Nortel chief strategy officer George Riedel, who told Reuters that the company does not feel constrained in its ability to make acquisitions. While Nortel be may be open to the idea of acquisitions, the reality is its appetite can’t be too big because the company doesn’t have a strong enough balance sheet. Its cash position is shrinking, no one is going to accept Nortel stock as a part of a deal, and the company has so many shares outstanding, it can’t even think about doing an offering that would dilute its existing shareholders even more. Therefore, the reality is Nortel will likely pursue tiny deals (less than $100-million) and partnerships long before it ever can think about doing something more significant.

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  • Observer

    http://www.cbc.ca/cp/Money/061012/J10121...

    16:56:00 EDT Oct 12, 2006

    Its daily TSX volume is typically between 10 million and 20 million shares with frequent spikes – on Sept. 26, for instance, 53.2 million shares changed hands, with the price closing down a penny.

    He suggests that the majority of Nortel buying and selling is done by individuals, not institutions, “and a lot of it day traders.”

    A gain of three cents per share on 50,000 shares is $1,500 for a few seconds of online work – “then they wait for it to go down and they do it again,” Ketchen said.

    “It’s not my idea of fun, but it’s a fact of life.”

    Nortel has more than 4.3 billion shares outstanding, and “I think it is surrounded more by hope than anything else,” Ketchen said.

    For investors with a longer-term horizon, Nortel’s prospects are dim, says Ross Healy, president and CEO of Strategic Analysis Corp., who was a lonely prophet of doom in the heady days of 2000 and remains a doubter about the company.

    His firm calculates Nortel’s fair market value at $1.33 per share, and “it just strikes me as a catastrophe in waiting.”

    I look at the long, long, long-term trading pattern of Nortel for the past three decades, and if I had to make guess as to where the stock might bottom in a bearish market I would say that it could double-bottom at its 2002 low.”

    But value investor Healy is not alone in seeing a gloomy future.

  • Observer

    Acquisitions? How?

    NT blew 20 billion whopping dollars in fruitless acquisitions during the bubble era. They do not have a good track record in making acquisitions. Forget it.

    NT paid $448M for PEC (now ever so cleverly renamed to Nortel Government Solutions) for a declining earnings since 2002 at $15M a year, money better just left in the bank and a deal that analysts hated.

    Tasman: “Still, after nearly a decade in business, the company manages to make less than $10 million in sales per annum — Hoovers puts the amount at $7.8 million. At the advertised price, therefore, Nortel looks to be paying a whopping 12.8 times sales to acquire Tasman’s technology. ”

    Force10 said thanks but no thanks to Nortel, like who in their right mind wants Nortel paper after having to issue high risk / high yeild bonds after creditors increased cash collateralization due to ongoing post fraud/settlement revisions (from $3.5B to a whopping 5B) and printing tanking shares they directly influenced by anouncing revisions that doubled from intial downplayed estimates of $866M to $1.48B!

    Nothing like they say, Putian, Neptune, Huawei, BSNL, numbers/cerdibility, etc., as they tank…

    Nortel does not have a good track record in acquisitions as it buys companies out of its area and sells exsisting business after exhausting asssets.

    They remain directionless risking their careers with no easy fixes/no miracles/ no plan and so much more to come like fines from cash, possible reverse split, dilution, criminal results, etc…

    What acquisitions, with what money?! They have a projected $1.6B rapidly declining cash by year end after printing a multiple of this in paper to look solvent, (note they closed loopholes following this requiring pension liabilities be listed in future bond applications, and they diluted 14.5 % of the company in 628M shares, above their 100M/yr, way more than they earn) and they have another $1.8B debt due in 2008 they can’t collateralize. How much cash will be left by then?

    Acquisitions? They can’t even merge like the others bracing for the future. No one wants anything to do with them from shareholders, to customers, to peers in the industry.

    Nortel keeps bonuses and continues to pay themselves mega lotteries like the $37M the CEO gets while contradicting R&D cuts, a long awaited plan , financial revisions, partnerships, etc… directionless acquisitions headed to insolvency

  • rock samborsky

    Attention all: the above “Observer” is the notorious Jamezzz4Markis (of the Yahoo NT message board, which he has ruined with his flood of negative, insane ramblings like those above), a mental patient who has an obsessive hatred of Nortel because he lost the family fortune whilst gambling with Nortel stock.

    So take his incoherent babblings with a grain of salt; the boy is sick.

  • Hey Rock

    I wonder if he gained persmission as required from Canadian Press and/or CBC prior to reposting the story here and on Yahoo. Not that it matters much since the story has been altered from its original form which seems to be a direct violation of the Copyright guidelines and permissions for reuse.

  • rock samborsky

    Well, I ask you, how can crazy boy Markis put a negative spin on anything and everything related to NT unless he does a little judicious editing? Cut and paste and voila, new and improved lies.

  • nortel watcher

    could not find observers article anywhere. please direct me to site as the website you entered with this supposed info. will not come up no matter what i do.

  • observer’s psychiatrist

    attention attention- my patient observer(jamezzz) has escaped the institution and has obviously headed straight for access to the internet as you can surmise by his obsessive compulsive disorder, which has been traced back to the apparent inbreeding by his parents.

    This should be a lesson to all, in that you should all refrain from incestuous activity for the end result is a pitiful product like observer (jamezzz).

    the psychiatrist

  • Observer

    You unethical pumpers remind me of Nortel slandering ethical Gary Daichendt, rotton to the core and I suspect you are employees too because no one is that stupid to be that underwater with all we know and all that awaits them pumping this stock on Yahoo since a multiple of its value. Your posts speak for themselves.

    Here is the link for all to read for themselves:

    “http;//www.cbc.ca/cp/Money/061012/J101218U.html”

    “His firm calculates Nortel’s fair market value at $1.33 per share, and “it just strikes me as a catastrophe in waiting.”
    “I would say that it could double-bottom at its 2002 low.”

    (what’s that, 45 cents?, also note/reverese split/dilution, etc.. /debt/insolvency)

    Looks good shameless and unethical stalking Nortel cheerleaders.

    I don’t hate Nortel, it is fraud I am against.

    Pumpers with a vested interest always contributing zero to the topic but [ersonally attack. They have challenged posts over the last few years since a multiple of its value, poetic justice, like what awaits them in criminal results / derivative class action / etc… it is endless. The moral majority always wins in the end.

    Ross Healy has been right all along about Nortel. So have the critics at Yahoo. Pumpers posts speak for themselves.

  • Leave a Reply

    The village idiot Observer strikes again. Psychiatrist, please up this patient’s dosage.

  • Ya right … you don’t hate Nortel

    Then how do you justify ….

    …. the lie you told about Paul Martin the past Prime Minister of Canada calling Nortel a fraud
    …. your repeated racial slurs and attacks on Mike Z.
    …. creating bogus press releases using Nortel’s name in support of your agenda of hatred, revenge and destruction
    …. altering copyright protected news items and posting them to ensure the context you want is displayed

    I doubt many people believe you when you say you don’t hate Nortel.

  • Luke

    My question is: why do you hate Nortel? Did you lose money because of them? Or it’s just their power that hits you? You seem to be scared that Nortel will dominate the telecom market again as it did several times in a century of history.
    Or did you perhaps try to be hired by them during the boom and were the only one that couldnt make it?
    Relax man!

  • nortel watcher

    i’m glad that the same article you posted for us to read is finally on here so I can see the whole thing and read exactly what it said. I don’t have a problem with your posts except for the fact that they are all so redundant…..we get that Nortel has had some serious problems and is still working through things in such a competitive market to introduce the right product lines and regain investor confidence but if your going to post articles please read the complete article and don’t just handpick the worst of it to prove your point. I think we would all take you more seriously if your hatred for this company would not blind your judgment.

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