Not that I want to be a Grinch during the holiday season, but it should be noted that Nortel shares hit a 52-week low of $15.17 earlier this week – more 50% below the 52-week high of $31.79.
When taking the 10:1 stock consolidation into consideration, the stock is trading at $1.51, which is really not that far away from penny-stock status. Yikes.
Here’s what Douglas A. McIntyre had to say about Nortel on Blogging Stocks:
“Supplying infrastructure to the world’s big telecom and cable companies used to look like a sexy business. But, Nortel shares are off to $15.20 from a 52-week high of $31.79. Rival Alcatel-Lucent (NYSE: ALU) is doing no better. The build-out of systems like 3G and WiMax is going slower than planned and mergers of big telecom companies have taken some customers out of the picture. The market may begin to improve, but companies with more advanced tech, like Cisco Systems (NASDAQ: CSCO), are likely to benefit.”
Here’s what analysts think of Nortel shares:
It would be interesting to know who’s got a $31 target and how that’s being justified given it’s about 50% above the mean target.
The implication is that business is bad and Cisco has ‘better technology’. Nonsense. There is lots of business to be had but Nortel isn’t getting its fair share anymore. Nortel isn’t getting its fair share because it doesn’t have anything interesting to sell and Nortel has lost most of it’s best people. Cisco’s current technology is not any better than Nortel’s but they have better leaders, a broader portfolio, a solid future’s strategy and the ability to execute. Nortel’s problem is leadership. MZ is the wrong guy for a CEO role and he’s hired very badly. I don’t know if Nortel can ever recover from that. The Nortel board is incompetent and/or asleep at the wheel. What a shame.
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Cisco also has reasonable support options. I do not know if there is still a distinction but a couple of years ago I was involved in negotiating support arrangements at a large carrier and cisco had a “premiere” service that guaranteed a north american support team and response 24/7/365. Of course you paid more, but not as much as one would think given the corporate smoke about how much cheaper offshore costs are.
The recent router agreement between cisco and at&t is an example of what the future holds. I am pretty sure cisco is not there yet at the higher layers, but they continue eating everyone else’s lunch at L2 and L3. This is despite the architectural and reliability problems I have seen with their 7609s (which admittedly were addressed by support pretty quickly)
Nortel has never been able to attract a top notch leader because (my opinion) it’s internal culture is too hard to control. It has had some good “home grown” leaders, Jean Monte (mr. potatohead) for one. I think there is still a lot of that old PTT mentality left on the BoD from a financial perspective. They are too reliant on EDC funds and it will bite them very soon.
There is still this notion of entrepreneurial divisions within the company (good), but the entrepreneurs spend so much energy competing (working on a different solution to the same problem) internally (bad), there was little in the way of a metric to measure entrepreneurial progress at the top (bad) and they (used to) report earnings differently (catastrophic).
I was wondering what happened to PBT and PBB? I did not hear Roese mention it in his last interview. Perhaps it would have been out of context for the discussion, but that is Roese’s job; to put the things nortel is working on IN context at every opportunity. I have to wonder if it is not selling?
The Week That Was: a 52-Week Low
Not that I want to be a Grinch during the holiday season, but it should be noted that Nortel shares hit a 52-week low of $15.17 earlier this week – more 50% below the 52-week high of $31.79.
When taking the 10:1 stock consolidation into consideration, the stock is trading at $1.51, which is really not that far away from penny-stock status. Yikes.
Here’s what Douglas A. McIntyre had to say about Nortel on Blogging Stocks:
“Supplying infrastructure to the world’s big telecom and cable companies used to look like a sexy business. But, Nortel shares are off to $15.20 from a 52-week high of $31.79. Rival Alcatel-Lucent (NYSE: ALU) is doing no better. The build-out of systems like 3G and WiMax is going slower than planned and mergers of big telecom companies have taken some customers out of the picture. The market may begin to improve, but companies with more advanced tech, like Cisco Systems (NASDAQ: CSCO), are likely to benefit.”
Here’s what analysts think of Nortel shares:
It would be interesting to know who’s got a $31 target and how that’s being justified given it’s about 50% above the mean target.