Comments on: Credit Suisse Down on Nortel

By: Observer

Observer — Tue, 18 Sep 2007 04:37:14 +0000

My apologies, you are right, I mean Kostas Papageorgiou of Scotia Bank not UBS.

By: Novice Investor

Novice Investor — Mon, 17 Sep 2007 13:29:57 +0000

If Scotia thinks Nortel is such a BUY (one year out C$34.00) then why wouldn’t Nortel buy back their own stock ? Certain % and/or up to certain $ amount (issuer bid ?)

I don’t know enough about Nortel buying Tellabs Inc. but if CEO Mike Zafirovski thought that buying 52,500 Nortel shares August 8th, 2007 between U$19.00 – U$19.33 for U$1,006,000, was a good idea then Nortel Networks Corporation should buy back their own stock and invest in itself at current levels ?

I believe the other rumour is Motorola could buy Nortel.

The financial scandal continues …. do you believe the following comment is correct ?

“However, another legal expert suggested the six-month gap could be an indication that the SEC believes it may be headed towards the settlement stage. Over 90 per cent of such cases end in a settlement, according to John Coffee, professor of securities law at Columbia University. He said putting the two groups in one case is more efficient than pursuing one, and then going after the other, he said.”

Anyway, I think it’s time for a name change …. too much “dirt” associated with Nortel name.

Your comments ?

By: ap

ap — Sun, 16 Sep 2007 17:41:30 +0000

there appears to be an error quoting UBS research with respect to Nortel. UBS has not recommended Nortel shares for a while and has remained skeptical of the turnaround targets set by Nortel management ever since Mike Z’s appointment. The $34 price target quoted by UBS is incorrect.

By: Observer

Observer — Sat, 15 Sep 2007 18:00:54 +0000

If we see the chart, Credit Suisse has been forecasting Nortel spot on since their last downgrade June 8th. Charter equity’s downgrade in August was also correct.

UBS’ analyst has bad track record and a zero star rating forecasting Nortel correctly.

One has to be careful what analysts say what and most importantly why let alone this consistently and incorrectly.

It is also interesting to note that analysts as a whole generally overestimate targets as Nortel traditionally trades at a premium and traditionally disappoints.

Even with a whopping $16 target gicen so much more to come like the CDMA hit in 2008 that accounts for 80-90% of their EBT, the 14.5% dilution factor as they print B3 rated paper and their increasing interest rates, exchange rates, reduced revenues and outlook, the struggle with divestments and cuts as everyone knows they can not grow the business in their death spiral losing money for a decade, etc., it is endless, Credit Suisse targets based on proven forecasts bear by far more merit than UBS’ which are around 100% higher bearing none.

I question the reasoning behind the most entertaining forecasts like those from Citibank, R.W, Baird, and Scotia bank with puffery swimming against the tide of proven analysts who even overestimate.

I wouldn’t be surprised to see a further reduction of 30% from Nortel’s current stock price next year as it makes 52 week lows year after year.

This stock is at it’s lowest levels in 5 years and there are no miracles on the horizon, quite the contrary.