Just in case you were wondering, Nortel still expects revenue to grow in the low single digits this year, while gross margins will be about 43%. Analysts expect Nortel to have sales of $11.2-billion compared with $10.95-billion in 2007.
this is nothing more than a cash grab. old debt has to be retired. but rather than pay it down it is about taking debt in fact increasing the debt portion by 175 million. an old proverb comes to mind - rob peter to pay paul. look at the net cash. this pig is losing 300 million a year. look at net cash flows and total accumalated debt then come back with your stupid rants. its buried in debt and very soon this pig is going to be on somebodys table ready to be carved up.
Nortel watcher
I have to agree with Shrink...furthermore, when you see Nortel raising the debt offering to $675M at the end of the same day of the announcement, it makes you wonder if Pavi believes this is one run at the credit markets that Nortel should be making the most of in case actual revenues and margins (it seems likely) don't agree with the earlier guidance..
Unlike heathy companies with a sound business plan, Nortel's executive leadership doesn't have the option of opting for an equity offering since at today's share price and avg volume, it would require aprox. 13 trading days with all else being constant...certainly, it is cheaper to pay the piper 10.75% than to see Nortel's share price swoon 35% from so many shares hitting the market right before those from the class-action settlement next month..
And yet, the most amazing part is that institutional buyers will pony up the money..
observer
This is a move out the GE playbook of financial wizardry.
frank burch
ooh...double ouch!!
seeker
You want facts M.Burch ? Nortel did not add a single penny to the shareholders in nearly 30 years. Ouch ! Triple ouch !!
frank burch
You people are nuts! NT has made alot of progress. The old notes were convertibles..thats why the rate was so low. NT wants flexibilty going forward. That is why they refinance the debt and leave $3b+ on the blanace sheet. Nt could cure cancer and a few of you would come up with a negative slant. Everything I write is backed up by facts. You idiiots are like: "Wow ! Double ouch !!!!", "Step up to plate whoever", "Stop your BS about operating margins! "
My advice: Get a life. Do you do shots of vodka and then post? Go ahead and short the stock or sell your stock and get on with life. Whatever you do, consider contributing some verifiable facts rather than the constant idiotic rants.
seeker
Hot from the press : The offering size was increased from $500 million (as previously announced) to $675 million. Wow ! Double ouch !!!!
seeker
If I understand correctly they are refinancing at twice the rate they add before ! Ok, in counterpart they reaffirm the gloomy outlook to reassure the market ? Ouch !!!
frank burch
The debt sale is to refinance the final portion of the September 2008 convertibles. Look at it this way: they redeemed convertibles and issues Sr. Debt. Total debt remains unchanged.
The Psychiatrist
Frank-
Another way of looking at it is that NT does not have the confidence in their own operational activities to just retire that debt due in Sep this year,why?
They have a little over $3 Billion in cash,so even if they pay down this upcoming debt,it still leaves them with over $2.5 billion in cash and considering that MZ stated that they will generate cash in a meaningful way in 2009,then why are they afraid to pay down this debt?
Not to mention a savings of $72 million a year in interest or about .15 cents/share- this alone would be good for $3 added on to the current shareprice or an increase market cap of $1.5 billion.
I personally don't understand this logic whether it is coming from Z, or Pavi or the BOD, if they did go ahead and pay down that debt,it sends the market a message that they have confidence in their ongoing business transformation plan and would possibly result in an increase in shareprice from current levels- something that Z had so distinctly pointed out,so what gives?
If they had decided to pay down this debt,leaving them with a smaller cash balance and would later find themselves looking at a possible acquisition down the road then they couild always do a note offering then,and quite possibly under more favourable terms as the credit markets are expected to gradually increase from this point on.
Furhrmore I fiind the S&P timing of their "outlook" on NT suspect as well as NT themself reaffirming their 2008 outlook simultaneously as the notes offering.
I have been a longtime shareholder and have lost a ton of money on this company and with these latest anouncements I don't see any improvement on the transparency of their activities as MZ has promised from day 1.
MZ- actions speak louder than words,if you really mean what you say about NT generating cash in a meaningful way in 2009 then I don't see why a cash balance of $2.5 billion after paying down this upcoming debt would not be a comfortable level considering there would be only 2 quarters short of 2009 - the year in which the company is supposed to start generating cash in a meaningful way according to you.
the only other possible thing that makes sense is that NT is cuurently working on a potential acquisition and want to reassure the acquiree that cash will be a big part of this purchase.
Step up to plate whoever- I 've been a shareholder too long to know that this arrangement isn't logical unless of coarse there really is a looming acquisition on the horizon.
Apple
Frank
You suggest that nothing is changed, don't you?
Why you are so bias on NT?
Are you one of Nt's employees_managers?
You must be one of them....
-----
How about 4% turned into 10.75% ?
Does it tell you anything?
It does tell me that NT has the junk status ratings at Moodys nowadays.
It means that NT stock is high risk investment. Do you agree with NT stock as very high risk? Probably you are ready to hype NT stock no matter what as all dishonest Nortel's employees do each and everyday, everywhere...
I say there is the light behind that tunnel!
There are good companies out there ready to hire all good and honest Nortel's employees!
Stop your lies about NT stock and Nortel company!
We know that company very well! At one point NT hyped its stock to $300_400 bill market cap on false profits and expectations /they did not have enough installers John Roth reported/
Today NT is $3.5 bill market cap and Market is always right!
I think odds of winning in Las Vegas are much better... just my own opinion about that POS stock.
What a shame!
Apple
I forgot to mention about cash Nortel is going to use as well...
I remember $800 mill due in 2008 so Nortel will use_lose $300 mill cash as well..
Frank, does it tell you anyting about Nt stock?
Or maybe we can go back to fundamentals...
When Nt can be a profitable company?
Stop your BS about operating margins! It's not GAAP number!
When I look at NT stock I see $2 loss a share in last 12 months!
$8 stock with $2 a share loss!
Nortel Reaffirms Outlook
Just in case you were wondering, Nortel still expects revenue to grow in the low single digits this year, while gross margins will be about 43%. Analysts expect Nortel to have sales of $11.2-billion compared with $10.95-billion in 2007.
Source: AP
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