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      • « MEN: Wrong Deal, Wrong Time | Main | A Post-MEN Plan: Pay Down Debt »

      NT Hits $2.33

      By Mark Evans | September 26, 2008

      It’s not a good day on the stock markets so it’s not a surprise that Nortel is getting caught in the downdraft. The stock touched a new record low of $2.33 earlier today.

      That caught my eye after Independent International Investment Research, which has been bullish on Nortel, issued a note suggesting that Nortel is a “buy” with a target price of US$3.57.

      IIIR’s outlook on Nortel is:

      Picture 1-118

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      Topics: Analyst Coverage |

      Viewing 27 Comments

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        Why aren't the brass converting their paychecks into stocks for even a few weeks?
        That would stop said nattering nabobs of Nortel negativism dead, and boost the stock. No?
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        $2.26 today. Not that far away from a sub-$1B market cap.
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        $2.18 today.
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        Yes about $1B for the whole, and I read that Zaf expects 1.5B for MEN, eh men are you kidding?
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        Ha ha... too true. If I wanted the MEN business and Nortel had it on the market for $1.5B, why wouldn't I just buy the whole company for less and sell off the Enterprise and Carrier pieces to finance the MEN acquisition?
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        Even after the negative diatribe, his summation anticipates sustainability .

        I try not to express myself formally unless I sense an attitude but this strikes me as somewhat bizarre like deer in the headlights syndrome. =)

        It neared folding at 43 cents extreme presplit last go round with exponentially less woes and here it sits at around half that today, at 23 cents.

        We witness 25% less orders, CDMA decline that accounts for almost all their earnings, LTE going route of WiMax after selling UMTS and now they are TRYING to sell MENs to pay for layoffs... $400M less cash, etc... It is endless and the death spiral seems to be speeding at a catalyzing rate, especially if customers go on strike all at once questioning if they will be around.

        Duncan Stewart, Moody's, Altzman score, and even other past optimisitic analysts, etc., are no longer optimistic in connection with its very survival, let alone calling this "undervalued".

        He isn't the first bull analyst if you will kindly excuse the grass intent of bull here. It brings me no pleasure to beg to differ in their ability to sell anything let alone be around in the not too distant future.
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        Let's me tell you what is going on in Nortel's daily life:

        There are meetings after meetings to talk about proposals. You can image how the meeting would like if you have 10 senior stuff sitting around table, and ask 1 poor guy to do the work.

        So when they need to reduce cost, they let the poor dude go and keep all the seniors because they are Nortel's most valuable asset.

        To really recover Nortel, it's better to decide which manager to remove y asking bottom level engineer's evaluation on those manager's performance. NOT THE OTHER WAY AROUND!

        Nortel is like an army with 10000 generals and 100 soldiers!

        It's so obvious, why there is no one mentioned it?!
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        if they do this as you propose, there will hardly be any managers in the company.
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        One hundred Percent correct Statement.
        Employees should give MANAGER evaluations.
        All the dead wood, incompetencies, favouritism and nepotism would have been flushed out a long time ago.
        Grade people on their accomplishments, work ethic, intensity, wilingness
        to do new things. Measure accomplishment based most importantly on how they contribute to or cause decline in revenue streams. People, no matter how gifted cannot get good ratings if they are on a declining project or one that does not make money, unless they are proven architects with patents or if they were involved in a project or technology that is making money.
        Don't grade employees on managerial ego or perception, where the word of one well positioned idiotic chump can unfairly persuade a manager to really piss off an employee, let alone the manager being that idiotic chump who gives a rating based on the fact said employee left a rotting apple on their desk and told them it was them who put it there.
        Until or unless the managment fiasco at NT is fixed the company will continue to stumble and fall but maybe that is the plan when they become an enterprise software company focused on such BS as unified Communications. I assume they'll have lots of managers running different shows with their employees over in India or elsewhere. Anywhere but North America.
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        Mike said early on there were "crazy levels" there. He knows.

        I anticipate the higher severance costs may pose deterrent, cheaper to let the Indians go than the chiefs.

        Off topic, 90% of the time some one is generally terminated is not because they can't do the job but because the boss just doesn't like the way they part their hair, in the old economy as I remember it anyway when it was easy to make money. =) In Nortel's case some senior management gets promoted with lottery sized pay for no other reason than... well.. just being a pal... experienced or not, which may be part of the problem to begin with =)
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        Have you noticed that most of the time Zafirovski looks like he’s working for Nortel’s competition? I think I’m onto something.
        Here's my theory:
        1. Somehow Nortel’s competition planted Mike Zafirovski as Nortel's CEO (I still don't know how it happened but I’m close to uncover it).
        2. Zafirovski (Nortel’s competition mole) agrees to settles class action lawsuit to drain Nortel's cash and devalue common shares. The settlement is the worst possible deal Nortel could get ever.
        3. To further deplete Nortel's cash position, Zafirovski pushes out almost all senior executives and replaces them with his buddies. There were 17 executives during Owens reign; they were replaced with 21 executives (19 hired by Zafirovski). Head-hunters’ fees alone must have run into tens of millions of dollars.
        4. To fool investors, when the stock was still over $30, Zafirovski mumbles that it would not be beneficial to sell the company at this moment. In his own words 'if you sell the company now, you could get maybe 30-40% upside on the shares, but if I fix the company, the shares will appreciate by 3 to 4 times’.
        5. To confuse investors even further, Zafirovski hires his buddy Hackney as the operation’s head honcho. Hackney announces he will achieve 1.7B cost savings on ‘business transformation’ and cost reduction. In fact the savings were $ 0.00, but KPMG pocketed over 100M in business assessment fees.
        6. To cover Hackney’s screw-up, Zafirovski moves him to Enterprise as head honcho.
        7. Zafirovski hires John Roese, who in turn bets on Indoor WiMax solution that nobody wants. Nortel sinks millions of $ in WiMax R&D, and eventually cans the project.
        8. Zafirovski sells UMTS to Alcatel-Lucent. The UMTS fetches $300M after Nortel spent $4B to develop it.
        9. When the stock hit $19, Zafirovski (using competition’s hush money) buys 1M worth of stock arguing that the stock is undervalued. Couple of months later, during quarterly review, Zafirovski announce huge profit losses. The news drags down the stock even further.
        10. Zafirovski announces layoffs of 2,100 employees in North America and Europe. The whole centers are being closed and jobs transferred to China. The layoffs and transfers are done in a really sloppy manner. For instance, Zafirovski puts Harold Graham (probably the biggest chump of them all) in charge to close Calgary operation. In Calgary, Graham puts local manages (that are being layoff as well), in charge of lying off Calgary employees. At the moment, over 200 people are doing nothing, waiting till June (next year) when they will get severance payments.
        11. On a worst possible day, waiting 3 years from the day he was hired, Zafirovski announces that during quarterly review, two months earlier, he actually meant that the sales will drop 4% (not increase by 4%), and because of further ‘business transformation’ the MEN is for sale’.

        My prediction for next couple of months:

        12. Fire sale generates 500M for MEN (enough to pay 2 month of executives’ bonuses)
        13. During next quarterly review, Zafirovski announces that he was mistaken (he forgot about additional 0), actually the sales are down 40% (not 4%). The stock plunges below $1.00.
        14. The company is broken into two divisions; enterprise and wireless.
        15. CISCO buys enterprise for 700M and Alcatel-Lucent buys wireless for 800M
        16. The 1.5B raised is used to pay bondholders’ debt, the stock goes down to $0.00.
        17. Zafirovski, Hackney, and Roese get few hundred million dollars from CISCO/Lucent for their consulting fees.
        18. Zafirovski moves back to Macedonia where he takes position as the Caliph of Skopje. Hackney becomes a man of cloth and preaches anger management to underprivileged single moms. John Roese opens a RBC (Roese Basement Company). RBC’s main goal will be to perfect Warp 5 driving engine and Klingon Cloaking Device.
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        I love it - Mike Z the Manchurian CEO or should he be the Macedonian CEO..??
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        1. and foremost: Zafirovski is an American. </thinker>
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        I thought of that too. But Nortel is not relevant. would have been a good strategy a few years ago. Now the competition does not have to do anything. they jsut have to wait it out and buy this real cheap.
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        You know it really does make you wonder.
        Your run down on what transpired would almost make one believe the crew
        was planted by the competition. Very Well Done.
        Seriously however, there are Seven Deadly Sins that have led to the Decline of Nortel.
        1/ The Accounting Fiasco.
        2/ Brutal Leadership at the Top Executive Ranks (CEO's) and the BOD.
        3/ Brutal Management at Middle and Lower Levels.
        4/ Too many employees making no real contribution but being handsomely paid.
        5/ Inability to understand when they were saturating the market with a particular technology and not adjusting accordingly.
        6/ Intense worldwide telco cut throat competition.
        7/ Lack of Interest from the Government to Sustain the high tech community in Ottawa.
        Recently Terence Matthews who founded Newbridge says Ottawa (basically kanata and nepean) is quickly losing its place as a high tech sector due to the evaporation of critical mass due to outsourcing, selling out to China, India, Mexico etc and lack of Investment and Interest by the Canadian Government. The liberal Premier of Ontario is Dalton McGuinty. He would never go to bat for the high tech sector. He is more interested in agreeing with the knighting of morgentaler, gun laws (as if that would make any difference in Toronto where it's all about lax, ignorant immgration policies) and ensuring Ontario is marching in lockstep with Quebec, bilingual policies, hirings and the such. McGuinty is only interested about getting more votes and gets that from the welfare and refugee roll that he imports by the 100's of thousands every year. He does not care about the people that make a real contribution to the economy or the middle class. How huge is the ontario deficit now? Isn't it in the billions? If he won't do anything, let alone the ottawa mayor or city council why should the Feds Care?
        Of course I am using ottawa as an example since it has been noted as one of the two crown jewels of nortel. The other of course is their R@D center in Beijing. If this is what it is like at Ottawa can you imagine what it is like at all the lesser jewels? Tells you all you need to know.
        I have friends left at NT and none of them know what is going to happen next even if they've been told the contrary.
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        Ex-exec,

        Dude, you are a sick genius; lol. So here’s the plan: we write a script called “The Turnaround”, which is a conspiracy-centric story (Hollywood LOVES those), shop it to my CAA buddies and hire the following actors to play the real characters:

        Z - David Strathairn (http://www.imdb.com/name/nm0000657/)
        John Roese – Gary Sinise – (great typecasting; should have been a talent agent)
        Hackney – Alec Baldwin (temper, temper, temper)
        Riedel – Claude Rains, The Invisible Man (http://www.imdb.com/title/tt0024184/)
        Drinkwater – Donald Sutherland
        Russo – Tina Fey (she can play any woman)
        Chambers – ‘blond’ Kevin Spacey (gay, gay, gay…so gay)
        Zander – in a dual role ‘brunette’ Kevin Spacey (trying to hide he’s not so gay)

        Coming soon to a theater near you…--bb
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        I recommend casting Christopher Walken as Mike Z. I swear, in many of his town hall meetings he sounds EXACTLY like Christopher Walken. Just listen next time.....
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        C’mon DJ, it’s a serious movie and not an SNL sketch…--bb
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        Bang on!
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        The company executives will still get millions in bonuses while the board is dozing off. If you want to turn this company around then fire the management team, executives and the board. Ah yes the stock prices, well, its very high with these underperforming, incompetent, selfish jokers in charge.
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        Nortel .... could this be a Magna happy ending ?

        Magna experienced a similar growth under Frank Stronach, then brink of extinction ($2.00 a share when Frank Stronach went in to politics) and rise to the top of the automotive field when Frank came back. NORTEL NEEDS NEW MANAGEMENT and VISION.

        Regarding the customers, Nortel's $9-$10 billion in sales, needs an IBM, Motorolla, Microsoft to back Nortel.
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        Psychiatrist, noted that no other telco vendor is selling for 1/10th their annual revenues. You would think that mgmt would be jumping on the stock; yet, that is not happening. You would think that a competitor or equity investor would jump at buying up the company; however, its debt level and pension liability are two of many deterrents.

        If exnt2's comments are somewhat insensitive to the efforts of Nortel employees striving to keep the company in business, what do you think the coming layoffs are going to do as the elitist Nortelians decide on the fate of the less-elitist Nortelians?

        Let's be honest and agree that Nortel employees are not as shaken by the individual opinions and comments posted here as they are by the mismanagement of a $10B annual business.
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        undervalued???? probably that is its true value. what else can you expect from this company? come on this is just analyst crap. it was undervalued at 30, 25, 15, 10, 8 ... it just dropped like a rock because it is probably a rock that deserves to sit at the bottom of the ocean.

        most customers and competitors consider Nortel to be less and less relevant as a vendor. Unlike the analysts, I'd say it will go to under $2 in some time.

        I have options valued at $1200. I am thinking of wiping my butt with it in the morning to send it by courier to Z.
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        "undervalued???? probably that is its true value. what else can you expect from this company? come on this is just analyst crap. it was undervalued at 30, 25, 15, 10, 8 ... it just dropped like a rock because it is probably a rock that deserves to sit at the bottom of the ocean"


        while Nortel does have its share of problems right now,there is no technology company or any other industry peer that is selling for 1/10th of its annual revenue.


        Your statement also seems to undermine the efforts that thousands of hard working employees call their livelihood.
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        why dont you go counsel Hackney. this is reality. no need to get so emotional. this is the true value of nortel. hardworking maybe some. as far as i know most work has stopped. people gave up a long time ago. nobody cares. there are some people who work hard ok. but working hard does not mean a thing when your products do not get to market, they fail miserably or it lags the competition.

        I met one startup. they have a product developed in 8 months with jsut 20 people. Nortel tries the same thing with 2 years and 100 people and failed miserably. so question is working smarter not harder.

        many people in Nortel cannot even code the so called team leaders, architects.
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        Unfortunately, all too often it is the actions of the few (e.g.: Wall Street, Pennsylvania Avenue, the mountains in Afghanistan, etc.) that undermine the individual and/or collective efforts of their respective constituencies. It’s called leadership or the severe lack thereof…--bb
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        I wonder if this iteration of the board is capable of acting? Where is that back-stabbing Cleghorn when you need him?
       
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