The Stock Price is Irrelevant

In agreement.
Unfortunately thinking that the same management will make key game changing decisions in 30 days while having had the opportunity to make them in 36 months will drive a fundamental turnaround is not wise.

tic-tac – 180 days left

Hi Mark,

I know what you mean — does it really “matter” whether Nortel trades at US$1 or US$1.50? And if it moves from the first to the second is it worth headlines that “Nortel is up 50%?”

But I want to push back (as a stout defender of capital markets) and quote you: “Until Nortel comes clean on its new structure and strategic direction on Nov. 10, there’s nothing fundamental that investors or analysts can grasp as real and tangible.”

Exactly, Given that the company isn't syaing what is going on and that there isn't much news…the ONLY information that investors have access to is the collective “wisdom” of the millions of investors who daily buy and sell Nortel shares and bonds. Individually few or none of them have crucial info about NT and its prospects — but en masse they probably do a fairly efficient job of discounting NT's prospects. They are daily voting with their wallets after collecting millions of disparate global pieces of information on the economy, telecom markets and Nortel's competitors. And all of those votes combined ain't perfect, but it IS an important data point.

Which means the stock price is NOT irrelevant, I think…

I wouldn't say the stock price is irrelevant, but nor would I say it is the only important measure of health on the Nortel dashboard.

The stock price is an indicator of perceived market value and investor confidence. This is useful information for potential investors and customers alike.

When the stock performance and trends are compared with that of direct competitors, that provides even more relevant information.

When a stock price plummets as it has for Nortel, it's going to have a difficult to predict impact on orders.

maybe some impact from the markets but even before the crash, stock price went down from the 5s to the 2s. that is a good indication of nortel value post announcement of faltering sales and men.

faling 50% from the 2s is an indication that most investors have given up and throwing in the towel. the major funds owning nortel must have dumped stock for sure.

when nov 10 results come in, unless there is a layoff announcement of 5000, the stock will go down again by 30-50%. because nortel itself said they had to sell a prized asset like men to bring in liquidity.

Let's say I bought in at $70. Then it falls to $5. I've lost >90%. Now it falls to $1. What's the difference, a shopping spree at the dollar store?

I strongly disagree stock price is not important, quite the contrary, to where I may be missing something here.

It is not only these analysts who are at a consensus that troubled times are ahead but the very investors for a stock that traditionally trades at a premium. Moody's Credit Ratingser also indicate troubled times may be ahead. The Altzman score also indicate such negative fundamentals that their bankruptcy score is right off the charts.

I believe it is not only that troubled times are ahead but getting worse, specifically reflected by the stock price as the ultimate measuring stick. The price reflects how they still remain troubled /struggling after already struggling from the past to present and into the future. They make no money and now lose even more in a worsening trend. Never before in such a dire position reflected in the stock price all time lows.

Just how bad is it for them to sell even more key units for even more layoffs as their major earnings area decline after already losing money for a decade. stock price indeed reflects this Decline in orders and cash and most importantly outlook.

The only way stock price is irrelevant in my view is because it trades so low as in who cares and there are more pressing issues for them to address.

May I suggest it is the analyst's views that should be deemed irrelevant, given they always overstate and target above a level it currently trades at. Just how much worse is it now at low single digit sub dollar presplit targets. What Nortel has endlessly fed or feeds these analysts in optimism has not been truthful, even recent growth to decline revisions midstream through 2008 are of prime example in a worsening trend.

The stock price reflects problems or it would trade higher for outlook sake as it always did trade at a premium. It even rallied following their extreme 10X's reverse split that was to entice institutions at well over 10 times its current value. A lot of lost ground to ever make up in their boat.

Is price so irrelevant not to detract from CEOs credibility in forecasting of $20 buying opportunities or single digit growth or endless boasted aspirations to contradictions. like WiMax or LTE now being or sought to being derisked, etc…

This was company who diluted 100M shares a year for years and at the even a 5 buck presplit level that's half a billion whopping bucks a year they are missing on top of accelerating decline with recent almost all their earnings CDMA hit, Missing this half a billion buck boost may indeed be very relevant too.

Powerful comment for debate might be the stock price is not important given so many unknowns but where history my argue otherwise in decline . I do not subscribe to the theory ignore the chart or ignore the stock price as there is no indication of turn around, quite the contrary, and specifically reflected what directly effected the stock.

No news has traditionally proven to be bad news with Notell and right now their renewed silence amid the traditional small orders announced is leading up to Nov 10th numbers. We brace for a large decline to cash, smaller revenues if they can even sell MENs and for cash, more layoffs, etc., that reflects uncertainty in its best light with this stock price.

Stock price is important as it reflects many ongoing events that have led up to the point it is at now, 12 cents presplit, for a reason and not that anyone has spooked the flock for this traditionally bloated value defined as a tanking 'dog” for years by the charts and thing are not getting better. For a company this size it simply spells trouble in my view.

I think stock price is very important and perhaps the best measuring stick of what is to come, better that what Nortel or analysts claim. Quite contrary to irrelevant and a direct reflection of their past present and future, in blatant chart format. Perhaps all one has to do now is connect the dots to see what is to come given its past.

Every indicator out there is screaming disaster. Everybody knows we're not out of the woods yet. It's not hindsight, it's common sense and the courage to do the right thing (ie SELL).

It's difficult because you always think “Hmmm…if I sell now I'll lose money” (and that's human nature), but the fact is if you don't sell you're definitely going to lose money. I wouldn't touch the market for another 6-12 months. I may miss out on some upswings but so what. At least I can sleep at night. If I need excitement I'll go to Vegas!

Thank you for the personal attack, much appreciated. Do you feel better now?

Critics or as loongs like to call us, bashers are everywhere on each and every stock message board. Why don't we blame them all for all the stock losing 40% on average this year?
That naive opinion about critics is just that, naive. NT lost 99.99 %from $1240 to $1 and that is for a reason!
We are at the time of market correction and controlled downturn in the economy.
Market does what market suppose to do, suppose to clean market from weak and not competitive companies, push them into restructuring, push them into profitability. How was it possible for some companies to stay unprofitable for years and far away from profitability in the future?
btw
If NT was not good a stock to be listed at 44 cents few years ago how it is good now at 9-12 cents. Sure it isn't. Market capitalization at $500 mill shows it and will not change a bit if NT makes another 1:10 split. Rsplit was basically done to fool investors into thinking that pps was good at $19 rsplit adjusted. and yes NT did it, fooled analysts with false turnaround stories in Nov 2006 and single digit growth this Summer. How many times NT confirmed those false single digit growth stories? Nortel lost all the qualifications to be listed on the stock market, lets call it, in my opinion.
12 cents pre rsplit!, $500 mill market cap with 36000 employees, growing debt, growing Pension deficit, losing cash and negative earnings. The perfect recipe for CH11 and structural changes. AirCanada scenario is a good example and Mike Z said he liked AirCanada story. So be it. It's not the end of the world. Face it!
Mike Z risked his carrier and just lost. It happens everywhere very often. Did he expect another restatement just when he got the job? I don't think so. That restatement was probably the main reason for him to be diverted from his plans. Too bad for him and for Nortel accountants. How many Nortel's accountants it takes to do restatements? Answer 1200
also
2 dozen forensic accountants combed Nortel's books last few years to build criminal case against ex-Nortel's managers.
Who would forget that one?

sure, an army of accountants cirumvented looming delisting deadlines with wrong figures too!

Even future periods were incorrect revising Q205 and went on to print $2B paper to pay increasingly antsy creditors. /chronic struggles….

money moved into Q406 to make 2006 yearly numbers and yet we still heard about “deferred revenues” .

endless events leading up to current state of affairs

How do you know there will be any layoffs next week.
Q3 results are a week from monday.

Hey! I work at a Tim Hortons now. Are you saying that's a bad thing?

hahaha… no, not at all…. nothing wrong with tim hortons at all… I happen to love it in fact.

I just think its interesting that markets value a double double more than a share of nortel at the moment
…. which just gave me a thought…. If I give up my morning cup for a year, thats 365 free cups of nortel.

Duncan explains in this post how stock markets work…