CBC.com did an investment feature on Nortel, focusing on who’s trading the stock (mostly retail investors, it appears) and the stock’s outlook. The most bearish comments came from Ross Healy, president and CEO with Strategic Analysis Corp. and a long-time Nortel watcher. Healy suggests Nortel’s fair market value is $1.33 a share and he describes the company 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,” he said. Healy may be right but Nortel’s troubles (or, conversely, its prospects) may hinge more on market conditions and the state of the company’s technology portfolio, which has been hampered by the company’s accounting woes in recent years, than the current management team. In conversations with many of the senior executive that CEO Mike Zafirovski has recruited over the past year, the common theme is optimism and sincerity. People such as George Riedel and Dietmar Wendt really want to see Nortel do well for all the right reasons. Granted, they probably have sweet incentive packages that will reward them for success but investors may not care too much if Nortel can regain some of its momentum. Of course, Zafirovski and his management team have many, many challenges to overcome. In particular, they still need to figure out where the company is focused strategically. There’s a lot of talk about Wi-Max, 4G and IP-TV but few people look at Nortel as a market leader in any of those areas. Truth be told, 2007 looks to be a make or break year for Nortel given investors – and customers – are looking for strategic execution now that most of the corporate baggage (accounting scandal, class-action lawsuits, etc.) has been addressed. Update: In the name of fairness, Scotia Scotia has a $2.80 12-month target price for Nortel
Dim Outlook for NT Shares
CBC.com did an investment feature on Nortel, focusing on who’s trading the stock (mostly retail investors, it appears) and the stock’s outlook. The most bearish comments came from Ross Healy, president and CEO with Strategic Analysis Corp. and a long-time Nortel watcher. Healy suggests Nortel’s fair market value is $1.33 a share and he describes the company 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,” he said. Healy may be right but Nortel’s troubles (or, conversely, its prospects) may hinge more on market conditions and the state of the company’s technology portfolio, which has been hampered by the company’s accounting woes in recent years, than the current management team. In conversations with many of the senior executive that CEO Mike Zafirovski has recruited over the past year, the common theme is optimism and sincerity. People such as George Riedel and Dietmar Wendt really want to see Nortel do well for all the right reasons. Granted, they probably have sweet incentive packages that will reward them for success but investors may not care too much if Nortel can regain some of its momentum. Of course, Zafirovski and his management team have many, many challenges to overcome. In particular, they still need to figure out where the company is focused strategically. There’s a lot of talk about Wi-Max, 4G and IP-TV but few people look at Nortel as a market leader in any of those areas. Truth be told, 2007 looks to be a make or break year for Nortel given investors – and customers – are looking for strategic execution now that most of the corporate baggage (accounting scandal, class-action lawsuits, etc.) has been addressed. Update: In the name of fairness, Scotia Scotia has a $2.80 12-month target price for Nortel