Lots of stuff coming out of the AGM. Among the most interesting is a Reuters story in which Mike Zafirvoski suggests Nortel could make acquisitions to fuel growth but it will refrain given tighter credit markets.
“In the current environment, of course, financing is a challenge relative to where it was a year ago,” he said, adding: “We will not do anything silly.”
Bill Nelson, Nortel’s executive vice-president of global sales, told Reuters that an acquisition could help the company fill in gaps in its technology portfolio, or give it access to markets where it has a small presence.
The last deal of any size made by Nortel was the $99-million purchase of Tasman Networks in December 2005.
What is Mike going to use to buy companies: Nortel stock, buttons, 6 sigma T shirts??! Nortel, with its debt load and low stock price, is not a buyer, its a seller. Nortel has a debt to equity ratio of 1.6, meaning it has $1.60 of debt for every dollar of equity. Cisco has debt to equity of 0.2! Nobody is lending Nortel a dime in today's market to go out and buy anybody. My translation of Mike's “financing is a challenge” is “no one will give us any money”.
The Psychiatrist
Nortel's debt to equity is more like 1.4 and not 1.6 as you suggest.
Yahoo finance is a little behind the curve.
http://ext.com ex-nt
OK, if its 1.4, it's still too high to go shopping.
Observer
I've posted several times since last summer on this blog that Nortel or anyone else would be unable to do anything because of the roiled credit markets. This is old news people. Nortel management like most other companies is behind the curve when predicting the enormity of this crisis. And its going to get much worse before it gets better.
On the bright side, Nortel is actually in a good situation because of the breadth and depth of its businesses. In a slowing economy, breadth is what is necessary to survive a downturn.
Observer
I've posted several times since last summer on this blog that Nortel or anyone else would be unable to do anything because of the roiled credit markets. This is old news people. Nortel management like most other companies is behind the curve when predicting the enormity of this crisis. And its going to get much worse before it gets better.
On the bright side, Nortel is actually in a good situation because of the breadth and depth of its businesses. In a slowing economy, breadth is what is necessary to survive a downturn.
Nortel to Hold Off on M&A
Lots of stuff coming out of the AGM. Among the most interesting is a Reuters story in which Mike Zafirvoski suggests Nortel could make acquisitions to fuel growth but it will refrain given tighter credit markets.
“In the current environment, of course, financing is a challenge relative to where it was a year ago,” he said, adding: “We will not do anything silly.”
Bill Nelson, Nortel’s executive vice-president of global sales, told Reuters that an acquisition could help the company fill in gaps in its technology portfolio, or give it access to markets where it has a small presence.
The last deal of any size made by Nortel was the $99-million purchase of Tasman Networks in December 2005.
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