Comments on: MEN Sale Struggling

By: exnt2

exnt2 — Sat, 11 Oct 2008 01:34:24 +0000

nobdy can make any sense of what you wrote.

Nortel is worth $800 million in market cap
Nortel purchase today is $10 billion incl cash, debt, equivalents

MEN is 15% of Nortel in terms of sales. So a ballaprk price is $1.5 billion, which coincidently is 15% of total revenue and Nortel valuation.

The lower MEN revenue and Nortel revenue / share price goes, the lower the valuation.

I would peg the unit at $650 million as I would not pay for any Nortel debt baggage, which would be roughly $900 million allocated to MEN.

All I have to do then is wait till this sinks lower to about $500 million to get a really sweet deal.

By: exnt2

exnt2 — Sat, 11 Oct 2008 01:20:31 +0000

I had said 650 million. I'd think with the conditions now, it will go for a fire sale price of 400-500 million cash + equity deal. not much from Nortel expectations but depends upon how desperate they are.

By: exnt2

exnt2 — Fri, 10 Oct 2008 21:34:24 +0000

By: exnt2

exnt2 — Fri, 10 Oct 2008 21:20:31 +0000

By: ex-Nortel

ex-Nortel — Fri, 10 Oct 2008 02:50:40 +0000

I had stated that MEN was worth perhaps $700M in an environment in which Nortel was not a desperate seller and there were interested buyers. Unfortunately, Nortel is desperate and there are no interested buyers at $700M. The reasons is that any party that might want to buy MEN now believes that it can buy the MEN unit a lot cheaper from a bankruptcy court or from a private equity firm attempting to quickly recoup capital.

And of course, the value of MEN goes down everyday as its sales levels decline.

By: Another Nortel Watcher

Another Nortel Watcher — Fri, 10 Oct 2008 00:39:21 +0000

Yes, I would think that Nortel has about bottomed out for the time being. However, investing in Nortel right now is about as safe as putting your money on red or black and spinning the roulette wheel. The next major event will be the 3Q results call. If that goes badly, the value of the company will plummet to new depths. If it goes well, you could double your money in a few days. Like I said, roulette. Just like all the other penny stocks. Do you feel lucky?

Nortel needs a solid growth strategy to stabilize its stock value. Without that, financial performance prediction is just a big emotional guess on quarterly cost-cutting performance.

By: pm

pm — Fri, 10 Oct 2008 00:13:28 +0000

Nortel has bottomed out ! The Dow was down close to 700 points today yet Nortel gained 7.6% on the NYSE ! Get in now or forever hold your peace

By: notafan

notafan — Thu, 09 Oct 2008 22:37:51 +0000

i don't know if it's just me but i find that what you're saying just makes no sense. don't get me wrong. i'm not an expert in these things, i'm just simply speaking based on what i got out of a second year accounting course.

it doesn't matter how much MEN is worth, or how close it is worth to nortel's market cap. lets just imagine MEN is worth a trillion dollars but yet nortel's equity was a million. with the market cap of a billion dollars, i would not say nortel is undervalued because MEN, a part of nortel, is worth a lot more than the market cap, but rather i would say nortel is overvalued because the market cap is a thousand times its equity.

like i said, assets don't say anything about a company being over/undervalued, unless you look at its liabilities. and with the two, you pretty much get 'equity'. thats pretty much all i remember from my accounting course.

By: The Psychiatrist

The Psychiatrist — Thu, 09 Oct 2008 21:39:28 +0000

"when you buy MEN for $700 million, you're not buying nortel's debt, which is billions of dollars. $700 million is just a figure in nortel's assets."

true,but your also not getting access to Nortel's cash of which is expected to be between $2.6b-$2.9b as well as Nortel's other assets and intellectual property.

If you view the sale of MEN for about $700m as a distressed one considering current market conditions,then it is safe to assume in that context that the whole of Nortel is actually undervalued at a market cap slightly above the purported $700m value for MEN alone.

By: notafan

notafan — Thu, 09 Oct 2008 21:18:32 +0000

actually, the psychiatrist's reasoning makes no sense, regardless of his conclusion:

when you buy MEN for $700 million, you're not buying nortel's debt, which is billions of dollars. $700 million is just a figure in nortel's assets.

having said that, at equity of $2.5 billion and market cap of under a billion, nortel is probably undervalued, but my point is that comparing the market cap with a figure in assets doesn't tell you whether a company is undervalued or not.