One thing about analysts who cover Nortel; they like to travel in packs.
Hot on the heels of Nortel’s annual investor day, the analyst reports continue to flow. One from TD Securities’ Chris Umiastowski proclaims that “Nortel is Making a Comeback”. He continues to call Nortel an “action list buy” with a target price of US$13.
“We walked away with more confidence in the management team, and we heard a lot of detailed information that backs up management’s plan to dramatically boost operating margin,” he said in a research report.
Umiastowski provides a long list of reasons why he’s so optimistic about Nortel, highlighted by his belief that Nortel is going through a “massive cultural shift”.
“Aside from all of the details and plans presented by the company, we think that the most important takeaway is the overwhelming cultural change driven by Nortel’s new management team. We have never before seen Nortel possess such strong focus on profitable execution of its business plan, which we attribute to the GE culture brought in by Zafirovski and other members of the senior executive team.”
Not to criticize Umiastowski or the other analysts who are now buoyed by Nortel’s prospects but it is fascinating to see the dramatic difference in sentiment compared with three months ago when Nortel shares were trading below $6 and analysts were scrambling to get off the bandwagon.
Maybe Nortel’s restructuring plan is starting slowly bear fruit after a long, long haul. Perhaps more analysts and investors are finally putting some faith in Nortel, what it’s doing and where it’s heading – something that had mostly evaporated for the longest time.
While there appears to be reason for optimism, anyone who has watched Nortel carefully over the past seven years since the telecom boom went bust knows that a pragmatic approach is not to get too carried away when times are good, and not too despondent when times are tough.
Nortel has the amazing ability to get you all aflutter AND break your heart – as if you didn’t know that already.
Note: While Umiastowski is bullish, RBC Capital Markets’ Mark Sue is cautious, maintaining his “sector perform” rating and $8 target price.
Glad to hear it. I think nortel has, to a large degree, the products and technical talent to accomplish a comeback. The alverion deal is a positive move toward filling the edge gap. I agree that LTE is where the action is, and a positive base for the merger with WiMax.
I wonder out loud, if nortel agrees there is a coming telecommunications slowdown in many emerging markets and return of telecom importance to the NA and Euro markets.
many - I agree that it's too early for Nortel to do any crowing, and my comment wasn't meant to do that. It's nice to see Nortel's stock go up a bit, and to see some positive 3rd party comments -- but I've seen Nortel's fortunes reverse several times in my 12 years at Nortel. I realize that there is still a lot of work to be done to get Nortel back in good graces with many people (and customers), but my sense is that Mike Z and our execs realize that too.
many
Frank & Bo,
It is truly amazing how fast things change. I hope people remember that, because nortel's dark days are not behind them yet. Progress has been made (and over hyped IMNSHO) lately. However nortel still has serious holes in its access/edge product line. PBT/PBB has taken a serious blow, and nortel is still hemorrhaging talent.
Power consumption is a nice hook, but it will not take people long to catch up, because a lot of the power savings is not in the hardware so much as software capable of turning hardware off and reducing CPU cycles when computing power is not needed.
The current leadership is not even close to recovering the value lost during their tenure so far, and it is *way* to early to start crowing. (early crowing is a perennial nortel marketing mistake)
Strategic vision needs to make it from powerpoint to execution, which is another nortel weakness.
I think nortel will survive due to increases in the reliance on telecommunications to replace travel, the depressed dollar and certainly to the innovators that remain at the company. However I do not credit any of these factors to the current management.
Another Nortel Watcher
ex-nt - very nicely articulated. I believe there are still a few bright lights in the Nortel leadership team, but they sure as hell aren't the new guys. MZ is an abysmal judge of talent.
frank
Bo- Great to have an actual, real comment that has meaning rather than the blabber from alot of these clowns. Nice of you to post here to help foster some constructive thoughts rather than leave me to the freaks who espouse all NT execs are "dishonest and lack integrity". Having met almost all of the Sr. Management at NT...on several ocassions...and having worked with them to fix NT for over 2 years, I can tell folks that this Management Team is phenomenal. In the face of a crashing stock that has little to do with current management, these people have persevered...and now they are starting to have success. Z, Binning, Hackney, Flanagan, Flaherty, Carey, Roese, Nelson, Morin, Wendt. etal...these people have made enormous sacrifrices to SAVE this company. You don't work like that and neglect your family etc for $1 million...you do it because you are driven and you have passion to be the best. The naysayers on this board can thank the people above that NT even exists today.
frank, I have also met all the senior team on many occasions and I disagree.
A. They are not all paragons of virtue as you state. Most of the new team: Z, Hackney, Roese, etc. do not inspire confidence in terms of knowledge, integrity, or leadership capability.
B. The current crashing stock has everything to do with the new team's almost 3 years in power. 3 years is almost two product cycles - you cannot blame the 65% reduction in Nortel's stock price over that timeframe on previous management.
C. I expect these folks to turn the company around given all the time they had and all the money they were paid. They have not sacrificed like the over 50,000 people who were laid off over the last 5 years. Let them earn their millions by turning the company around (results to date are disastrous) and stop trying to make them sound like Mother Teresa's. If they are neglecting their families while also screwing up at Nortel then they are fools to be pitied, not glorified.
I agree Mark - it is interesting to see how quickly the sentiment can change. It wasn't that long ago that Mike Z and others were telling people to look past the stock price and focus on the improving fundamentals of the business. That generally fell on deaf ears before, maybe the up-tick in the stock is allowing that to happen now.
puddintane
Early retirement here we come.
puddintane
I now recommend those who moved their retirement from "Balanced" to "Stock Purchase Plan" a full decade ago keep it there. And, heck, whoop it up a bit. Its gonna be like 1999 all over again.
TD’s Umiastowski: “Nortel is Making a Comeback”
One thing about analysts who cover Nortel; they like to travel in packs.
Hot on the heels of Nortel’s annual investor day, the analyst reports continue to flow. One from TD Securities’ Chris Umiastowski proclaims that “Nortel is Making a Comeback”. He continues to call Nortel an “action list buy” with a target price of US$13.
Umiastowski provides a long list of reasons why he’s so optimistic about Nortel, highlighted by his belief that Nortel is going through a “massive cultural shift”.
Not to criticize Umiastowski or the other analysts who are now buoyed by Nortel’s prospects but it is fascinating to see the dramatic difference in sentiment compared with three months ago when Nortel shares were trading below $6 and analysts were scrambling to get off the bandwagon.
Maybe Nortel’s restructuring plan is starting slowly bear fruit after a long, long haul. Perhaps more analysts and investors are finally putting some faith in Nortel, what it’s doing and where it’s heading – something that had mostly evaporated for the longest time.
While there appears to be reason for optimism, anyone who has watched Nortel carefully over the past seven years since the telecom boom went bust knows that a pragmatic approach is not to get too carried away when times are good, and not too despondent when times are tough.
Nortel has the amazing ability to get you all aflutter AND break your heart – as if you didn’t know that already.
Note: While Umiastowski is bullish, RBC Capital Markets’ Mark Sue is cautious, maintaining his “sector perform” rating and $8 target price.
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