Richards Defends Nortel

Barry Richards also posted a new report on the Paradigm website titled
"NT-Setting the record straight". I can't access it....anybody know what this report says?

enterprise will be sold off to Polycom, Microsoft, Siemens, Avaya. Nortel and its brand is over.

with 7-9 billion in debt, most creditors will start calling now to ensure that the company does not implode or have a fire sale. so even if anything is left, creditors would want their money back.

You can definitely see here that CDMA is going to be sold off or moved to China. NT already do CDMA work in their huge R@D lab in Beijing.
Just a matter of time before CDMA Nortel leaves North America or a competitor buys them out. I expect that announcement next year.

China Telecom has just announced the 1st round CDMA(the former CUTC CDMA network) biding results:
HUAWEI: 30%, 74000 carrier frequency, 20 of 81 cities
Alcatel Lucent: 20%, 48000, 13
MOTO: 18%, 45000, 15
Nortel: 17%, 42000, 13
ZTE: 14%, 35000, 21
this round's 81 cities account for about half of total value, including all Chinese provinces' capitals & important cities. the 2nd round biding will including about the other 200 smaller cities
averagely, every carrier frequency price about $4,400, a little less than the average global price
this final result differs much to the former rumors like ZTE 35%, HUAWEI 29%, ALU 20%...
HUAWEI definitely is the winner, consider it's former market 3% share, and the got 20 cities most located in China's most profitable southwest areas.
ALU lose the most valued Guangdong province market, this result mostly due to it's combined access & core network strategy. Although ALU promise will open its A-interface in the future, it still lose many scores
MOTO guards it's former market share, including Beijing, Hebei & some important cities in Guangdong province
NT also guards it's former market share, maintain it's advantage in Middle China, and get few advance
ZTE remain it's advantage in West China, and get the valuable City Chengdu in Sichuan Province, which just suffered a severe earthquake in May, maybe there will be lots of reconstruct opportunities...
Samsung maybe the loser, lost almost all it's former market share but only 1 city, yet the good news is rumor said it had got a large share in cellphone bid.

Call me crazy but I see Cisco rescuing Nortel; well, I mean ex-Cisco Charlie Giancarlo of SilverLake Partners (owners of Avaya, btw) buying up a future gem of a telecom player-MEN. Philippe (Morin) is a smart man, I think he even went through back channels to get this done. No current telecom vendor will buy MEN to help a competitor (if one can even call Nortel a competitor) but PE firms don’t have that problem and they do have money. Charlie G. may even recall his old pal Mike (I-thought-I could-run-a-content-company) Volpi away from Joost and make him CEO of MEN with Phillpe as the CTO. Yup, that old gypsy magic still might work. -- bb

Nortel has only a few businesses that make money: CDMA, enterprise voice, the old switching business, optical, and the list is over. These are all old, cash-cow stable businesses. Meanwhile, the company is structured like it has tons of good growing businesses. It has many many highly paid execs (over 200), huge operations teams, huge finance teams, marketing, large staff organizations, big sales groups, 6 sigma consultants, etc. The few good businesses could probably operate with their current R&D staffs, a few hundred sales people, a few hundred ops people, 30 staff people and about 6 execs. This would be a company of about 6000 people.

Elimination of short selling would also work .... Mr. Z is plugged into Washington and Ottawa, let's go with the "crisis" argument ....

Every Nortel employee making over $60,000 per year, should receive $5,000 cash per month and the rest is stock. All stock is bought in the market, held for 6 months, and then they have liquidity. Michael Z and the rest of the "high fliers" will be transparent (insider trading reports) and their ACTIONS will be louder than their WORDS !!

The reason optical has been break even is because it is tied to the boat anchor called Nortel. Whomever gets the NT optical business will see it go through the roof. Their technology in that field is way out ahead. They just need somebody with money to stroke it. Will that happen? Who knows.
All of MEN will go. That is what was announced so you should believe it.
If I was a member of MEN I would have guarded optimism. Things could go well and things could not. It all comes down to whom buys the unit, and what they intend to do with it.
If I was a member of Nortel after this sale, given the current climate and their plans for CDMA, 4G, LTE (that means no plans) I would be absolutely pessmistic. Enterprise and Carrier Voip will not be their saviour. I think the MEN employees are in a better position than the Nortel employees who are left behind, but there is no guarantee MEN employees won't avoild a package either. Too many unanswered questions, which has been the norm at Nortel since the tech collapse.

Hard to believe that all of MEN will go. There must be that are important for VANOC 2010 and London 2012 for Nortel's end to end metro/enterprise solution.

I agree that Nortel is heavily undervalued. My guess the naked shorts have hammered this stock. Its probably some hedge fund doing the dirty work for private equity. Sales are now 7.5x market cap ? By any reasonable measure there is something drastically wrong with this valuation. Nortel stock is functioning more like an Wall Street financial stock than a tech company. If the bailout in the US rescues the global credit markets and economy, Nortel will survive just fine and be able to restructure.

Of course, a $50 dollar stock price is 'possible' ... after a 1-for-25 stock consolidation! This past Wednesday may have been the final turning point for Nortel as all the chickens seem to have come home to roost. Clearly, those in corporate have no visibility even a full quarter into the future proving that no strategy exists for the company: CDMA sales are falling off a cliff and there is no other product to cover the lost of earnings; Optical, contrary to internal legend, continues to be a perpetual break-even business (at one time there were mind-boggling revenues, but never mind-boggling profits); and Enterprise is a midget compared to Cisco, but now not even possessing a niche to claim as there own.

With the announcement of the intent to sell MEN, how many companies will buy optical gear from NT until its future is clearer? With the intent to 'partner' in 4G, NT has effectively signaled it's getting out of the radio system (BTS) game - probably only to sell low-volume gateways in some possible future partnership -- if they are even lucky enough to achieve that.

Like Lucent, the national government will not protect NT from a takeover as it has become irrelevant in its industry and to the economy. There is no national interest to protect and no votes to gain.

Sadly, it's time to say Nortel is done - time to stick a fork in it.

From a hanging on MEN employee. The TPS reports were piling up. Too many Chiefs and not enough indians. Customers actually seemed pleased, however managment creating usless administraive task for us indians so they can play all 18 holes ---left us less time to deal with actual customers work. The day of reckoning has come and I hope all of the upper level MEN managment have to requalify themselves for the new MEN company. Us Indians can hopefully go back to working optical products even if its less money. Happiness is surely underated, and many of us Nortel Indians have been stressed for too many years.

Here is where Nortel is Headed based on everything I've seen.
Less than 5,000 Employees.
Small pizza box enterprise, hardware off the shelf built in Tanzania.
Strictly a software company. Only people left making money will be the CEO,
The Board of Directors, Managers left in the clique and sales managers.
Software will be done out of India, or wherever IBM do it?
That's the Nortel Vision.
This is all due to the brutal economy, cheap overseas labour, deception and cheating (Huaweii..copyright/patent infringement etc..look at the way they make food, clothes and toys).
This won't change unless the Canadian Government Buy Nortel and since they are not based in Quebec this will not happen.
And Don't fret Cisco lovers..the same fate awaits you, but you just don't know it yet. Major consolidation is needed in the Telco Industry for any of it to survive in
North America, unless you are a niche player. There are not many of them around these days.

Last week the CEO had the audacity to speak to his subjects to state that all of them should continue working normally like "business as usual" while he and his greedy executive team along with the incompetent board work on laying people off. What is sickening is that he spoke about accountability. Of course not his accountability or the board's. They will all be stealing from the company and breaking it up. The moral is at an all time and of course everyone where I work in NT pretty much knows that all these guys are no better than petty thieves.

Whatever he is smoking, I'd like a case of it please, there is being optimistic, but this is beyond the realm of conceivable.

There are too many layers to peel off the company, before any real plan can be put in place to work or to take any perspective on how good Nortel is to make money.
There are far too many people pretending (compliance, regulation, finance) they are doing their jobs when in fact all they do is look for all the things that will make your life miserable when facing a customer.
I'm not saying that NT should have no rules at all, we all saw what happened with all those restatements in the past. However that is not the current focus.
It pretty much reminds me of that movie "Body Snatchers" when the aliens start screaming and pointing fingers when they find out something is wrong........I feel myself like the human......
Anyway, I think NT should:
a) dump at least 1/3 to 1/2 of the current number of employees (after MEN gets sold, not sure NT is doing this, sounds like a desperate move),
b) dump from the product portfolio all "highly-customizable-products-that-leads-to-10000-manufacturing-codes-difficult-to-engineer-and-maintain",
c) make a real plan to get strong reseller partners and not run to save the partner every time they have a heartburn.
Just a reminder....I'm not a NT basher.....I want to see NT the way it was in the past.

Is Richards based in Canada? Is he smoking one of those potent Canadian Doobies??

Richards is confused. He ought to stick with the Nortel price target implied in his company's name...pair a dimes.

It is more profoundly astounding he totally circumvented the most pressiing issue of earnings. There were plenty yesteryear darlings with billions in annual sales too. So what.

He went right to revenue happy talk when in reality they sold more Nortel paper and liquidated assets that total around what they sell in a whole year! Cash not earned because they lose money for a decade, cash generated just to live another day.

Now they have to sell more assets just to afford the layoffs and he thinks it will go up 500%?

Undervalued? Last time there was talk of them going to zero was due to the rate of post bubble decline when it traded at 43 cents extreme presplit... even the stock price begs to differ with him at 30 cents now

Maybe he sees something we don't and I wonder if he thought $20 was a buying opportunity last August too?

When a company sells off assets, doesn't the book value typically decline, and hence, the stock price valuation as well? Or did I miss something in my finance classes?

ya ya ya
He is a funny guy.
Bull on NT.
Mark my words again
NT will enter 2009 with more than /more than/ $2.5 bill lower revenues in in all revenue pools! /new orders plus deferred rev/
Anyone can find my post here I said NT will have to cut additional 3_4 k jobs in 2008.
Bo Gowan was the first to laugh at me then.
What Bo Gowan can tell today about my post when Mike said_stated_reported new job cuts are needed and they are coming soon.
It's ironic as I know the past job cuts are not finished yet!
Come on Bo Gowan.
You must remember your post.
What do you say now?