Good Week for Nortel

By Mark Evans | Published: 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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  • Observer
    one of the few left - maybe its time to do something different ? This wil be crucial now that globalization has taken full effect.
  • One of the few left
    "maybe its time to do something different "

    Spoken like true Nortel management. That is the typical answer every time something else bad starts happening. Guess Calgery shutting down is more of that "good news" that is going around. Sorry, I just don't seem to be feeling the loving warm embrace of mother Nortel.
  • pudditane
    Radio Shack is poised for a hostile takeover.
  • Observer
    a good week indeed...nortel is getting back to normal operating rhythm. I believe its a good time to accumulate the stock for gains in 2010 and beyond.
  • many
    Observer

    "....nortel is getting back to normal operating rhythm"

    Let's hope not.
  • exnt2
    good thing because they could get that much. as far as Frank goes people ignore this schizophrenic. his bubble burst a long time ago and all he can do is hang on for life until he can retire. all he can do is drink the Nortel PR cool aid - maybe his own.
  • seeker
    Good week for Nortel ! ''Nortel sells $675M of debt at junk bond rates of 10.75% and it's a good thing?'' I am doubtful also. $3 billions in cash ok but a long term debt of $4.5 billions ! Add to that a hole of $2 billions in the employee pension plans. Yes the operating margin is improving but isn't that mostly achieve by cutting staff periodically ?
  • Another Nortel Watcher
    frank burch - yes, there are certainly some cranks frequenting this blog but just because they're cranks doesn't automatically make them wrong and you right. And Nortel is indeed a new company but that's not necessarily a good thing.

    Why don't you briefly articulate why you think "things are a lot better"? Better for whom? What yardstick are you using (certainly not company value)?
  • WatchAndSee
    This is good news? Nortel sells $675M of debt at junk bond rates of 10.75% and it's a good thing?

    Sorry, this doesn't exactly inspire confidence from my point of view!!!

    A company that has to pay this much to raise debt clearly has some very serious issues.
  • frank burch
    NNemployee: You are correct...things are alot better and NT is a new Company. Don't listen to these cranks...they want NT to fail...bitterness, bad feelings from the past, greed and probabaly substance abuse drives their bizarre comments. Post when you have some good thoughts on what is going better.
  • One of the few left
    Exactly how are things better at NT? More outsourcing, MCOE people taking NA jobs, employee downbanding, paycuts... Exactly what part of that is better?
  • Apple
    NNemployee: You are correct...things are alot better and NT is a new Company. Don't listen to these cranks...they want NT to fail...bitterness, bad feelings from the past, greed and probabaly substance abuse drives their bizarre comments. Post when you have some good thoughts on what is going better.
    =========
    re
    Frank
    Do you say better?
    Does it mean they are good now?
    Why don't you answer my question?
    Why you are so bias on NT stock?
    Why you post so much hype when the real world thinks that NT stock is POS and values NT as $3.5 bill market cap company?
    You are a dangerous person, man.
    You can be responsible for millions investors losing their money buying NT stock on your stupid advice! Strong Buy my a$$! Show me the real numbers!
    Yes, I say stupid and I can prove it!

  • Nortel watcher
    NNemployee, your tolerance for bad news and gloomy outlooks seems to be higher than the average person. If 4 years is not so bad, I guess you could stomach perhaps 10 yrs. Unfortunately for us shareholders, the ulcers have ruptured waiting for good news....of the elusive kind where the company shows a profit in 4 straight quarters
  • NNemployee
    hearing some good news for the first time in almost 4 years in Nortel is not so bad. Hope to see some real improvement inside the company in the future.

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