The Week in Review

The consensus in ongoing trend as an aggregate does not bode well for Nortel .

The stock makes new lows every year in this trend.

Just above 3B cash, will they have 2B something by Q3? Presenting cash at $3B something ($3.07B) than $2B something sounds better as they always want to make things sound better like 3 to 5 year turnarounds to 20 dollar buying opportunities, they lack credibility.

Also note cash decline from $4B in 2004 to under $2B Q206, and printing $2B bonds, $2B dilutive notes, largest asset $3B something appearing on books they seek to clean as expiring tax credit, sold assets, etc...and .. well ... you get the drift. Now with CDMA decline, forget it, this accounts for almost all their earnings (80-90% EBT)... you get the drift....

Ahem,,, as for the news this week, it does not seem to be getting better:.


The stock, which was already down 47% to the end of July, has fallen another 21%, to the US$6 level.

At its June 11 analyst day, the company forecast its CDMA revenues to decline at 4% per year between 2007 and 2011.

But in the second quarter the CDMA business fell 10% year over year. In other words, in 12 months it fell almost as far as Nortel had expected it to fall over 2.5 years -- and Nortel also said CDMA bookings for the next quarter look weak.

But it gets worse: Nortel recognized about US$300-million of deferred revenue from a joint venture with LG in the quarter. Those revenues are legit, but they don't have various associated costs, so Nortel's "true" SG&A in the second quarter was likely over 24%.


A company scoring 3.00 and above is considered safe, scores between 2.70 and 2.99 are in the "yellow flag" zone, scores between 1.80 and 2.70 mean the chance of filing for bankruptcy protection within two years is good, and scores below 1.80 mean "Watch out below!" (Nortel was Minus 2.05!)

Nortel plans to "integrate Pingtel technology" into its SMB portfolio,

Honestly, I'm quite dissatisfied with Nortel's promise of SIP integration. After evaluating their top-to-bottom, enterprise-to-SMB product lineup, Nortel continues to lack solid (but promised) progress in supporting SIP endpoints and non-legacy trunking scenarios. Will the Pingtel buy change any of this? Most likely not. In comparison, Avaya's SIP integration is head-and-shoulders above Nortel's progress in the field.

Bluesocket acquired Pingtel, which had raised about $30 million in venture backing, last summer. Lillelund told VentureWire at the time that Bluesocket needed a solid software play to keep up in a competitive arena. He also said that the company had 80 employees and expected to reach profitability some time in 2008.

But on Wednesday, Lillelund said Bluesocket now has 60 employees and has yet to turn a profit. He declined to discuss the company's financial state in detail. The CEO was tight-lipped about why Bluesocket sold Pingtel so quickly, or if the company was in need of some cash, saying only, "We found an interested, motivated buyer."