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Good Week for Nortel
By Mark Evans | May 22, 2008
Not only did Nortel sell $500-million of bonds earlier this week, but Standard & Poor’s gave the company some good news when it affirmed Nortel’s “B-minus” credit rating while changing its outlook to “positive” from “stable”.
“The revised outlook primarily reflects the steady improvement in profitability in the past several quarters despite difficult market conditions,” S&P credit analyst Madhav Hari said. “We expect this operating momentum to continue in the near term, mostly driven by the net benefit derived from the company’s fiscal 2008 and previous years’ business transformation initiatives.”
While improving the outlook to “positive, S&P said Nortel’s exposure to legacy products remains “significant and will likely pressure near-term revenue growth”.
But S&P also said “the company’s portfolio of growth products and services has shown good traction in recent quarters thereby mitigating the risk of large revenue losses. Furthermore, cash balances of more than US$3.2 billion have remained stable and should allow the company to execute its turnaround strategy in addition to providing healthy credit support.
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Topics: Financials |