The Sky and NT are Falling

NT the New Titantic is going down. All one can do is enjoy the song.
Fare thee well titantic!!!

http://www.youtube.com/watch?v=yf-6wlvaLHM&feat...

The whole irony with the staff cuts is that the least effectives are getting nice payouts and moving into jobs with Nortels competitors, while the employees who are highly regarded remain in hell and receive no payrises for 2009

Its a strategy of rewarding poor performers and punishing high achievers....but i guess that is why we have well paid low performers at the top

Not too mention the gross disparity between managers and employees.
I heard it was like one manager for every 8 people at NT.
That tells you all you need to know.

If you work for Nortel and need a steady income, get out now Go find another employer before you need to compete with another 30,000 employees.

If you think Mike Z is losing sleep , think again. He has enough dough to last him 5 lifetimes.

So much for the man who quoted Alexander the Great all the time. I guess you can tell a cheap watch from the genuine article. Go ack to driving taxis Mike

Despite my disdain for MZ and the GEnius exec team, that last comment was uncalled for.

Check the executive compensation: it represents ~10% of NT's market cap!!!

http://www.reuters.com/finance/stocks/companyOf...

Given the historical share price slide, if the exec team receives the same compensation this year they will be able to buy a majority stake of NT! Not that they would...

CRY BABY CRY.....

THE NT GEAR USES LESS ENERGY BECAUSE IT IS DOWN ALL THE TIME!!! THEY THOUGHT WE WERE GOING TO GET SCARED!!! BOO

Very funny watching you guys.....oops sorry, hiring freeze at Cisco....

No worries. I wouldn't work for them for as long as I have got a hole in my arse.

Wow - now you are a man...oops did I say man...try boy who has no b**** but your response is testimony to your character and small winker....guess you have to make up for your inadequencies somewhere.

Mike Z and his cabinet should be whacked.

We should call uncle Benny to do the job.

MZ is the boss of the GE mafia family in NT, it is organized crime.

Mike Z should use the $11M of bonus received 3 years ago to buy 5% of Nortel.

TOLD YA... the sky was falling... and it will continue because:...

1) the new structure is probably better than the matrix one BUT the dudes leading them are incompetents and in denial.
2) Arrogance and Ignorance = disaster
3) The customers are afraid of buying NT's solutions as they may not be available in 12 months (Chap 11 or M&A)
4) the CDMA business (the margin generator) continues to sink FAST as the wireless demand in the US is flattening.
5) The Enterprise business is breakeven and is lead by the wrong people.
6) Cash is being burnt fast and will continue
7) Executives still flying business class and using the corporate jet (despite of corporate travel freeze)
8) MZ and his Cabinet are getting salaries increases in 09 and bonus for 08 performance. It will be denied but it will show up in FY08 annual report in Feb/March.
9) The number of heads to be eliminated to survive is 8K but there is no money, so I guess the packages will be much much smaller in 2009....
10) The economy wont help

with this market cap the negotiations in Munich this week are going to be very easy... it is really cheap... good portfolio match between NT and NSN

Are you working for NSN? Cos there is a rumour as IBM will buy MEN.
You are the only one that saying NSN will but NT.

I have come to the conclusion that I have lost all my money that was invested in Nortel. The only thing I want out of that now is Mike Z to be sewed by the investors, running him BK and then his worthless a$s to crawl under a rock and stay there for the rest of his life.

We are still waiting for F Dunn trials. He is charged with criminal acts, cooking the books and misleading investors.
His line of defense is simple; he wanted the best for Nortel.
Prosecutors have been building the case for years and they are still not ready to go ahead, I guess.
You knew that Nortelhand before you Bought NT shares, didn't you?
Sorry but you also will have to blame yourself for your investing mistake. You are much smarter than others who still believe NT stock will jump up overnight to double digits.
Suing Mike Z will serve you nothing. He is not experienced to be NT's CEO but he is too smart to lose money_to lose the case.
Beside anytime public pointed out his misleading statements, he corrected them publicly.
It was just his mistake not a fraud! Bravo.
Example
When the restatements were necessary in 2006 he jumped out with assumption that there was no criminal intend that time.
When asked if anyone investigated the criminal intend, he admitted that he just assumed, there was no intend.
Same with single digit growth expectations for 2008.
He admitted he was just wrong_too optimistic and naïve as many other naïve and optimistic Nortel’s investors and employees.
Somehow they state that they are proud of their naïve optimism.
And I don’t get it! Why someone would be proud of being wrong for 5 years or longer?
Why they think critics of NT stock should be ashamed for critical analysis which are correct?
Yes I have the right to say I told you so and I am proud of that.





.

Anybody who thinks Frank Dung will be charged and end up doing time or paying huge sums of money in canuckistan is as wrong as wrong can be. This is canuckistan. He'll come out of it with more money and probably complain to the canadian HRC about discrimination or something along those lines.
Dung will get off scott free.
The gov't will not help NT. What did john manless do?
NT will sink into chapter 11 or breakup/selloff the divisions.
The packages will get smaller.
All I can say is I hope the packages get smaller for the useless managers, executives, admin and overpaid, underperforming engineers/designers first. The ones who have been there for years with special titles but are about as diversified and useful as a rat in a maze. You know who you are.
Hopefully proper packages or rewards will come to the employees who really earn it, make a contribution and don't rely on positioning, reward and job security based on a false perception they've created on some dolt of a manger or worse in that they polish their manager apples...if you know what I mean.
The place needs to drastically change it's line of thinking and how they run a business. Don't see that happening there.
The time of reckoning is coming.

Everybody needs to stop for a minute and take a much higher level view. Set aside the feeding frenzy on Nortel's problems and focus on a few fundamentals.

Nortel has annual revenues in the neighborhood of $10B. Many companies, including Avaya, would like to be able to say the same. Nortel's core problem is a margin problem, not a revenue problem. It boggles my mind that MZ hasn't been able to solve that in 3 years. Nortel needs an educated butcher to cut the waste and sell off the noise. Mike Z is hopeless. He doesn't understand the market and he hasn't surrounded himself with people that do. Big mistake. His actions are almost random and it shows.

The other root problem with Nortel is the lack of a corporate strategy connected with a strategic roadmap. This is an essential sales tool and after three years on the job, Mike Z doesn't have this either.

With the right people in place and the right empowerment, these fundamentals can be fixed pretty quickly. The journey to full recovery for Nortel would be a long one, but getting on the path could easily be a short term exercise. Getting on a recognized path to recovery that has some credibility would drive the stock up significantly and make a lot of people happy, especially those who buy in now.

WHERE IS THE BOARD AND WHY, WHY, WHY DON'T THEY ACT?

Bang on. Yes. It is a magin problem, and it starts with executive compensation and potted plants for board memebers that have not contributed one iota in a long time.

Agreed. I think it's bad enough now that I think it can be considered 'fiduciary negligence'. I've asked my company lawyer to evaluate whether it might be worth it to put the liability insurance company on notice that we're considering a class action lawsuit against the board. We'll see.

Look ANW
Something is wrong with your logic.
In your reply to my post you tried to convince me that BoD is a bunch of honest people and now you are considering suing BoD in the reply to Many.
read again what you have posted

C'mon, get real. Nortel leadership is certainly incompetent, but I'm really tired with rambling posts like yours that go on and on about malicious intent, hatred of shareholders,

Don't you find your posts contradicting?
so
class action lawsuit against the board. for what?
Can you be specific and constructive and at the same time optimistic? You are tired of the skepticism and pessimism on this board, aren't you?

Read more carefully. My points have always been that the BoD and Nortel Leadership are incompetent and need to be replaced. I don't think you'll find any inconsistencies.

However, I don't share your view that they're destroying Nortel on purpose. They're just incompetent.

Now, where are those ideas? NO MORE rants from you until you post your perspective on what the board should do.

The BoD is pretty clear what they wanted and what was the best in their opinion.
They are very consistent in their plans. They did not let big changes when Garys where there. They knew what it would be to implement Garys' plan. BoD did not like the plan.
They avoided that letting them go.
At that time shareholders had a chance to see the stock returning some value for them.
It wasn't the most important for the BoD. The stock price is secondary for BoD.
I don't want to go back much to bring more examples.
One simple question I posted here was
Why Mike Z did not sell Nortel when NT was above $30? Why he is ready to sell Nortel now when the market cap is $300 mill?
In addition there has not been a buyer for the best part of Nortel yet, how he can sell the rest?
There is nothing you can do about that, Sir.
Nortel will use ch11 as the law is created for such situations.
It's the best solution at this moment.
Sooner is better for Nortel and the remaining employees.
It show ignorance when Nortel's employees vent their anger here against best solution for them.
Current Nortel's shareholders will not find sympathy from anyone with 2 brain cells working. They invested in risky stock and they lost. Simple as that.
By using AC scenario Nortel will stay in Canada, restructure and come back stronger. What's wrong with that?
I say nothing wrong.

ANW,

Bravo! The fix is sooooo simple (even though the recovery path is not) but one has to ‘see it’. Just like putting a golf ball into the whole; got to ‘see the path’, or a free kick in soccer; got to see the way around the wall. I call it VISION, and that is the real problem at NT ( the lack thereof)….--bb

PS - Forget the Board, this is way over their heads!!!!

Thanks. All I want from the board is for one of them to press the 'flush' handle.

On second thought. I guess we also need them to hire the replacements. Sigh.

I agree that the BoD bares responsibility for not acting. However it may be too late right now. NT needs new and competent leadership however the Nortanic may be too far on its way down to attract anyone who could potentially save the company. It's a sort of catch-22. The company is in bad shape and in need of real leadership, yet because of this a real leader probably cannot be attracted or would have to be paid large sums of money that NT couldn't justify for whatever reason right now. (They bet big with MZ but that gamble did not work out)

I think you'd be surprised. The one advantage to Nortel's current state is that the upside is huge. I bet that there are a lot of aggressive candidates for MZ's role that would sign on to a performance-based contract. And this type of risk-taker is exactly what's needed to shake things up.

The question I have is, why are so many of the remaining North American and European employees so loyal to Nortel? It's not for the pension; maybe fear or inablity to get jobs? ; waiting on a package?

Waiting on a package. After watching millions of dollars in exec compensation packages walk out the door, hoping that I get a few thousand for giving my heart and soul to this company.

Not a good strategy. Company is stingy with severance which is why there were so few layoffs. They want to maximize attrition and the more people that leave this way the less need the see for packages. NT will hit BK before they give out mass severances!

Waiting is not good enough
You should ask your lawyer what to do and how to do it to get it.
The other day someone posted a link with the advice...
It said you have to be pro_active to win.
or maybe someone will be kind enough to post it again for you...
There still is $2 bill in cash, man.
You don't have much time as I see NT stock falls down quicker now, the last acceleration phase. (Well documented in my posts loong before it happened)
btw
If I state that it is not trading but free fall, pumpers think I am wrong about that.
nope
It is not trading, market was not designed for free falling stocks to be listed.
Call it rumblings if you prefer but I call the spade shovel!

Some people have families and other obligations and regardless packing up and moving your life aren't easy things.

Lay off 60,000 employees and expect to be unpopular.

Sorry folks. When I copied the final paragrpah, I unwittingly copied more. But it did not display until I read the comment after itr was posted. So here is a repeat without the other material. (Mark: Perhaps you could delete the prior comment).

Richard Finlay has an excellent blog about corporate governance, or more usually, the lack thereof.

In a blog a few days ago he wrote about Nortel. The link to his web site is http://finlayongovernance.com.

I will take the liberty of quoting his last paragraph.

"And where is Nortel’s board now? Has it laid out a plan that is capable of restoring the trust of investors and demonstrating that it comprehends what’s going on? Is it requiring any accountability from a CEO on whose watch $4.5 billion was lost? Or is it, like its predecessors, just partying in first class while Captain Z keeps hitting one iceberg after another?

A ten cent (unconsolidated) price per share seems to be a pretty resounding answer."

RIP
jayemmay

"And where is Nortel’s board now? Has it laid out a plan that is capable of restoring the trust of investors and demonstrating that it comprehends what’s going on? Is it requiring any accountability from a CEO on whose watch $4.5 billion was lost? Or is it, like its predecessors, just partying in first class while Captain Z keeps hitting one iceberg after another?"

Priceless. My sentiments EXACTLY!

jayemmay & ANW
You guys are ignorant to facts and lessons. We tried to teach you what Nortel does the best. Nortel hates shareholders and public exposure. In last 5 years which I remember. Nortel’s ignored investors; sometimes I wrote straight forward, NT hates common investors. What credibility or accountability? from Nortel?
They will be very happy to get rid of off all investors. How? They will use well-tested scenario, AirCanada scenario. Public, including me, will accept that scenario as the best solution at this point_moment. The best for Nortel and employees. CH11. You guys are difficult students and you show that you have learned nothing from posting & reading yahoo and AAN boards in last 5 years. You knew that NT is high-risk low reward stock and you can blame nobody but yourselves for the position you are in now.
Hundreds red flags and yet you ignored them all.
Amazing!
Read what a shareholder Robert Verdun tried to do during an AGM
http://www.lightreading.com/document.asp?doc_id...
It's a shame that SEC lets trading of NT stock to continue when the stock is losing 25-50 % each and every day!
Why new Joe Plumbers are fooled into that stock day after day? Halt trading, start sell off or restructuring, assess assets ....Market cap is long time ago in default!
NT stock is in chaos; it's not trading is it?

yes4aapl - this post is complete nonsense. C'mon, get real. Nortel leadership is certainly incompetent, but I'm really tired with rambling posts like yours that go on and on about malicious intent, hatred of shareholders, global warming, etc., etc., etc.. There is no doubt in my mind that the Nortel leaders would be doing a better job if they were capable of it because that would open the door to a lot more compensation. You certainly seem to have a lot of time on your hands - why don't you invest some of it in creative and constructive suggestions. If you were sitting in front of the board right now, what (besides telling them all to commit suicide) would you advise them to do, and why?

Aren't you ashamed of your naive thinking and being wrong soooo looong about NT stock?
you said
"why don't you invest some of it in creative and constructive suggestions"
Definitely my suggestions are very constructive. I call the spade spade and call fraud a fraud when I see one.
It's definitely more constructive than 5 years of your optimism in place where you should use your critical analysis and skepticism.
That's why I said, blame yourself!
and now about showing the right way for Nortel!
Let's say you go to a family doc for a check-up. He finds something wrong with your hearth. Do you expect him to do the surgery too?
Cheap shot on your part.
No appreciation for right predictions and perfect analysis just blames of the messenger.
Show that you are a grown up not a naive child investing in stock markets!
Read my posts and find one which was wrong.
Maybe single digit growth lies I calculated and exposed long before Mike Z corrected hid statements?
Maybe new job cuts coming in 2008 (posted long time ago)
Maybe you don't even understand why NT stock is losing 20-40% each and every day since Q3 2008?
Who knows what you understand...

Look, you keep posting the same rants over and over again. Stop. Nobody reads them. You say your suggestions are very constructive yet I don't see a single suggestion in your post. Show us that you have some ideas and are capable of more than digital diarrhea.

ANW, its very simple, he wants Nortel destroyed. He will continue to manufacture digital diarrhea (I like that one LOL) until he achieves his mission.

As I learn more about what has transpired over the past few days related to the restructuring I am surprised at one key thing. I don't understand why they didn't include Carrier VoIP with Enterprise VoIP and UC. Market research suggests a 51% CAGR in UC over the next 4 years so a consistent end-to-end strategy could have been very effective to capture a reasonable piece of that market growth.

ANW, its very simple, he wants Nortel destroyed. He will continue to manufacture digital diarrhea (I like that one LOL) until he achieves his mission.
Tongue.In.Cheek
=============
re
If you had some brains you would clearly see what I do.
Nortel is finished yet you don't admit that you have been wrong for the last 5 years. You and ANW. I don't want to use other your aliases here. Don't you find it shameful to be wrong so long yet to personally attack those who were just correct about NT stock and the company?
Let me remind you that NT is 5 cents stock now and you considered $5 was a gift few years ago.
The stock fell from $5 to 5 Cents and you shamelessly are proud of your diarrhea posts on both message boards.
When will you admit your posts misled readers and apology for that?
When?

yes4aapl - more nonsense. You aren't paying attention. The next time you post, you better present your roadmap - in no more than 10 lines - that the board should implement. I expect high quality because you spend so much time watching Nortel. If you just vent again, you'll show all of us that you're just noise and we'll all laugh at you.

Remember, no more than 10 lines or you fail and nobody will read your post.

Richard Finlay has an excellent blog about corporate governance, or more usually, the lack thereof.

In a blog a few days ago he wrote about Nortel. The link to his web site is http://finlayongovernance.com.

I will take the liberty of quoting his last paragraph.

"And where is Nortel’s board now? Has it laid out a plan that is capable of restoring the trust of investors and demonstrating that it comprehends what’s going on? Is it requiring any accountability from a CEO on whose watch $4.5 billion was lost? Or is it, like its predecessors, just partying in first class while Captain Z keeps hitting one iceberg after another?

A ten cent (unconsolidated) price per share seems to be a pretty resounding answer."

RIP
jayemmay


The President Who Made the Voting Possible
Published by Finlay ON Governanceon November 5, 2008in Barack Obama, Campaign 2008, Civil Rights, Democracy, Hot Issues and Lyndon B. Johnson. 0 Comments


At times history and fate meet at a single time in a single place to shape a turning point in man’s unending search for freedom. So it was at Lexington and Concord. So it was a century ago at Appomattox. –President Lyndon B. Johnson, 1965

At a time when the first African-American has just been elected President of the United States, it is worthwhile to look at some of the other leaders who contributed to President-Elect Obama’s historic journey.

In March, 1965, President Lyndon Baines Johnson addressed a joint session of Congress to urge the passage of landmark voting rights legislation. While language in parts of the speech is antiquated by today’s standards, it was groundbreaking at the time. It had an eloquence that foreshadowed some of the thoughts in the victory speech of his successor in Chicago, 43 years later. The Voting Rights Act was signed into law in 1965. Without this single piece of legislation, it is doubtful that Mr. Obama could have been elected. Without it, Johnson believed, America would not endure.

Here is a clip from President Johnson’s historic speech. His courageous, and controversial, determination to tear down the barriers between the races and bring the African-American community into the governance of their nation can never be overstated. He would have been very proud to see an African-American member of his great Democratic party elected to the Presidency yesterday. And Americans can be very proud of President Johnson’s role in the soon-to-be 44th President’s success.




The New Frontier Rejoined
Published by Finlay ON Governanceon November 4, 2008in Barack Obama, Campaign 2008, Democracy and Hot Issues. 0 Comments
There is a tide that is surging across America. It carries a new reality that the most pressing divide today is not between red and blue states, or rich and poor, or even black and white. It is the struggle between generosity and selfishness, between transparency and secrecy, between inclusiveness and alienation. That was a central message in Barack Obama’s campaign. It will now be a force in the way the 44th President governs.

Today, in the land that invented modern ideas of representative government, Americans engaged in the largest single act of citizenship ever experienced in that country and perhaps the most significant event of its kind ever in the world. Sometime tonight, the expressions of record millions of voters from every part of the country, at every age level, from every ethnic and racial background, across a landscape where snows have already begun to fall to a hot Gulf coast where palm trees mock the winter, a page will have turned and a defining new one will be embarked upon in the great American experiment known as democracy.

Much about that future is unclear, but what is not is that the name Barack Obama will appear in the first lines of that new page. Before the dawn rises again, someone will turn to the young man who defied all the odds, and address him for the first time as “Mr. President-Elect.” And with those three words, his life, and the history of the nation he will lead for the next four years, will be forever changed.

Great presidents are the ones who have transformed America and raised it to something better than it was before. They are the ones who summon up in ordinary people the capacity to accomplish extraordinary feats they never knew possible. Washington, Jefferson and Adams freed a land from the shackles of distant princely tyranny. Lincoln freed one of its founding peoples from slavery. Roosevelt freed men and women from economic calamity and, later, from the march of fascism across Europe and Asia.

Barack Obama has freed countless young people from the cold gulag of cynicism and restored in them a confidence that what they do in public affairs can make a difference. And he has freed others of every age from the barriers of race and geography that for too long appealed to the darker instincts of men and women.

There is a tide that is surging across America and raising with it a spirit of hope and optimism that has not been seen in generations. It comes not a moment too soon, with an economic crisis worse than at any time since the 1930s, and a distant and costly war that has hurt America’s moral leadership abroad more than anytime since Vietnam.

But transformative leadership has always had the power to rise above setback and disaster. Mr. Obama appears to have that rare kind of leadership gift. The fact that people have recognized this reality on an almost unimagined scale is a testament to his character and ability, of course. Chief among his uncommon skills was the understanding that the most pressing divide today is not between red and blue states, or rich and poor, or even black and white. It is the struggle between generosity and selfishness, between transparency and secrecy, between inclusiveness and alienation. Most of all, it is the challenge to make the ethics and values we teach our children the driving character of how our governments, corporations and great institutions are run.

Mr. Obama’s victory is also a testament to the fact that governance matters, and what can happen when ordinary people decide to take charge of their lives and the instruments of power to reset the moral compass of government.

What new destinations of discovery and accomplishment history will record for an Obama administration are yet to be written. The task of maintaining the confidence of so many with such high expectations will not be easy. But if a young president can set a goal to free humans from the laws of physics and place man on the moon and safely return him to earth within a decade, if he can lay the groundwork in civil rights that helped overcome racial bigotry which in many ways was more intractable than gravity itself, as John F. Kennedy did, it is not inconceivable that his modern day successor can raise the torch that has been passed to him high enough to overcome the forces of arrogance and cynicism, selfishness and duplicity that for too long have managed to dim the embers of hope when it comes to matters of politics and national governance.

In many ways, much of the world, whose admiration of America may momentarily flag but never falter for long, cast its ballot for Barack Obama today as well. It was a vote for all the things it has found best in America over centuries: the spirit of innovation and unyielding optimism; freedom for each man and women to worship, to speak and to hold their governments to account; faith in the family and in God, and an irrepressible conviction on the part of every American -rich and poor, black and white- that tomorrow will be better than today.

Each generation needs its own new frontier where it is challenged to be defined more by what it gives back than what it takes away. President Kennedy articulated that ideal for his generation of leaders and citizens. A President Obama will speak with that voice for his. It is in the face of such responsibilities that leaders are wise to pray for wisdom in the hope that if that is not granted, perhaps at least common sense will be sent in consolation.

As this year began, we noted on these pages the gathering prospects of a young man whom we said had the improbably presidential name of Barack Obama. That changes today. The amazing thing about America is that the improbable can become the reality, which is why in America tonight there is an African-American who has inspired a nation to reach higher and beyond the barriers of the past, and why the nation he inspired now calls him Mr. President-Elect.

October of the Fleeting Trillions
Published by Finlay ON Governanceon October 31, 2008in $700 Billion Bailout, Capital Markets, Central Banks, Hot Issues, Leadership, Panic on Wall Street/Outrage on Main Street, Public Policy, Subprime Meltdown, Wall Street Bailout and Wall Street and Main Street. 1 Comment

The magnitude of the financial injury worldwide and the costs to repair it are breathtaking. But the loss of faith occasioned by what so many see as a colossal betrayal on the part of leaders and institutions may prove the most damaging of all.

The tenth month in the Gregorian calendar will go into history (please!) as the time when more money was lost by shareholders around the world and then found by governments to prop up the global financial system than any four-week period since civilization began. The amounts may well exceed ten thousand billion dollars when you consider the plunge in stock markets worldwide and the sums public treasuries are coming up with to bailout the banks and just about anything else that has a profit and loss statement.

The ultimate costs both human and financial of this economic carnage and unprecedented public monetary infusion will not be known for many years. The impact on the economy and monetary stability from the “solution” may carry unforeseen repercussions, just as the problem it is designed to solve went under the radar for too long. Without doubt, the interaction between capitalism and government has fundamentally shifted, as has confidence on the part of millions of citizens in the institutions they once admired but, alas, no longer even wish to be seen associating with. It may well be that a generation of investors which has lost so much will choose to forsake the stock market for the rest of their lives. Many young people could be left with an indelible impression of a system that can never be trusted, except that is to work profitably for a handful at the top until their folly and greed reaches the point where even they become its victims, too. The seeds of individual bitterness and social unrest have often been sown when the whirlwind of momentous events unearths the land.

Here’s a question –call it the ten trillion-dollar question: If bankers had done the jobs expected of them in a diligent fashion; if boards of directors had taken an interest in debt and leverage ¾two subjects that didn’t seem to be part of their vocabularies, much less on their agendas; if regulators had been breathing and perhaps even conscious; if policy makers had had the vision to see the possibility of failure and not just the mirage of endless prosperity, do you think all this would have happened? And what does it say about institutions and leaders in the 21st century that so many seemed incapable of exercising sound judgment and common sense, even when some were receiving compensation on a scale never seen in the history of professional managers?

The magnitude of the financial injury worldwide and the costs to repair it are, indeed, breathtaking. But the loss of faith occasioned by what so many see as a colossal betrayal on the part of leaders and institutions who acted as though they had the wisdom of prophets, but in truth had not even the foresight of blind men, may prove the most damaging of all. It is a lesson that will be remembered long after this October of the fleeting trillions has faded.








Outrage of the Week: Bankers Binging on the Bush Bailout Bonanza
Published by Finlay ON Governanceon October 25, 2008in $700 Billion Bailout, CEO Compensation, Capital Markets, Hot Issues, Outrage of the Week, Panic on Wall Street/Outrage on Main Street, Subprime Meltdown, Wall Street Bailout and Wall Street and Main Street. 1 Comment

Even in the face of their debacles of historic proportion, many of these institutions persist in acting in a manner more resembling an economic sociopath than a responsible steward of the public interest, whose salvation has essentially been made possible and underwritten by the American taxpayer.

Reminiscent of another major Bush administration blunder where what was advertised did not exactly work out that way in reality, there are signs that the great bank bailout that is the centerpiece of the $700 billion Treasury infusion is taking on a life of its own. Instead of loaning out their injection of public capital to small businesses and consumers, banks are either hoarding the money or using it to buy up other institutions. One sure example of this is PNC’s announcement on Friday of its purchase of National City, a smaller regional bank. The purchase price comes in at $5.8 billion. The amount PNC got from Treasury’s recent redistribution of taxpayer wealth to Wall Street and the financial sector (not in his wildest dreams could Karl Marx ever have thought that his theory would find such unlikely adopters) was $7.7 billion. Do you suppose the two are related?

The New York Times’s Joe Nocera thinks so. In an impressive bit of reporting, he recounts in his Saturday column how a JPMorgan executive set out the Bank’s view of the government’s injection in a recent employee conference call:

What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.

Lending money does not appear to be high on JPMorgan’s To Do list. And it is probably not on many other banks’ either.

The third bit of evidence that the public has been blindsided big-time by how the banks are handling their windfall came courtesy of Citigroup. They set aside $25 billion for bonuses this year, even after their record losses and write-downs, which were substantially beyond $25 billion. How much do you suppose they got under the first round of the bailout plan? Twenty-five billion, exactly.

The reality is swiftly emerging that the United States government has become a gigantic hedge fund. It is providing the money and guarantees that are permitting the banks to use their own capital in ways that will inure to greater advantage for top employees and insiders.

Mr. Nocera, whom I think has the normally impressive street-smart intuition of a native New Yorker, had a more optimistic view of why the $700 billion bailout had to be passed on an urgent and virtually unquestioned basis:

I don’t think they are going to wait much past the weekend. No deal, no credit markets. It’s as basic as that.

And if that happens, the consequences will be far more pressing than the failure of a Morgan Stanley or a Goldman Sachs. You won’t be able to get a mortgage. Credit card rates will skyrocket. Businesses will be unable to expand and grow. Unemployment will rise.

We were a tougher sell on the bailout and remain so today for obvious reasons. Here’s part of what we predicted.

Let’s be clear: the central purpose of the bill was to help Wall Street restore the glitter, glitz and gravy train to Wall Street. It is designed to help banks and bankers go back to the future and pretend that the mess they made never really happened. Nearly a trillion dollars can help rewrite a lot of history. It has much less to do with easing credit for Main Street….

Confidence has been the missing partner in the economic voyage of recent months. The consequences have been devastating. Prominent in accounting for its absence have been colossal misjudgments and self-indulgence on the part of Wall Street and its major banks. The entire economy has been turned upside down to repair the damage they have caused, at a cost no one ever could have conceived possible. Yet in the face of these debacles of historic proportion, many of these institutions persist in acting in a manner more resembling an economic sociopath than a responsible steward of the public interest, whose salvation has essentially been made possible and underwritten by the American taxpayer. Too many insist upon hoarding their rescue proceeds or using the money to expand or to reward themselves with huge bonuses. Last week we had the AIG junkets and the propsect of tens of millions being paid out to failed CEOs. Soon it will be the auto companies looking for a handout, with Cerberus Capital bigwigs doing all kinds of contortions to justify why the private equity firm that claimed Chrysler was better without the investing public should now have the full backing of the American taxpayers to save it. Somebody should add an index to the stock market which would measure hypocrisy, like the VIX gauges volatility. It might give investors a better clue as to a company’s real future.


Wall Street’s leaders have offered few words to quell the raging public opprobrium that is mounting against their actions. They have expressed virtually no criticism of the practices of their industry that led to the credit calamity. And they have had little to say to the shareholders and taxpayers who are carrying the can for their failures. They seem to think that their self-absorbed ways will continue into the future, this time with ordinary Americans footing the bill. They are wrong on so many levels.

Neither our economic system nor the millions of stakeholders who place their trust in it can afford captains of capitalism who demonstrate, time after time, such titanic misapprehension of both business reality and the role of public confidence that is essential to success, which is why the bank CEOs and boards that continue to remain tone deaf to the historic new dimension of their responsibilities resulting from the bailout they made necessary is our choice for the Outrage of the Week.






The Greenspan Myth and Other Hazards When Men are Called Gods
Published by Finlay ON Governanceon October 24, 2008in Alan Greenspan, Capital Markets, Central Banks, Corporate Governance, Fed, Hot Issues, Panic on Wall Street/Outrage on Main Street, Subprime Meltdown, Wall Street Bailout and Wall Street and Main Street. 0 Comments



Alan Greenspan/AFP


The once powerful and still influential former Fed chairman took no lessons at all from the carnage of Enron and other scandals that occurred on his watch, where boards had shown themselves to be utterly incapable of monitoring the ethical and financial health of company after company, and management’s approach to risk was the financial equivalent of the three-pack-a-day cigarette smoker.


Alan Greenspan, who used to be called the voice of “God” when it came to financial matters, appeared before the U.S. House Committee on Oversight and Government Reform this week. But rather than delivering his testimony with heavenly authority, this one-time head of the Federal Reserve gave a performance more like Woody Allen doing an impression of Captain Renault of Casablanca fame. Dr. Greenspan said he was “shocked, shocked” to discover how far astray the markets and financial firms went in the past several years in their abuse of mortgage-related securities.

He put it this way:

I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.

This is not the first time Dr. G looked like he had just stuck his finger in a light socket. We thought his vision was a little clouded in March of 2007, when he was among a crowd -which included U.S. Treasury Secretary Henry M. Paulson Jr.- that was pushing for less regulation of business. He said at a conference then that he didn’t see a need for most of the Sarbanes-Oxley legislation of 2002. He joined a loud chorus of business heavyweights who argued that boardroom regulation was sapping the competitiveness of American business. Talk about a near-terminal case of myopia.

Yet it seems odd, with all the carnage from Enron and other scandals that occurred on Dr. Greenspan’s watch, where boards had shown themselves to be utterly incapable of monitoring the ethical and financial health of company after company, that he still would have relied upon management to protect shareholders. In business, as with most large organizations these days, the right thing does not happen by default or through auto pilot. It requires intricate and robust mechanisms to ensure the right thing is clearly identified and is the subject of constant internal checks. Shareholder protection as far as management is concerned has too often been reduced to the cliché of the fox guarding the hen house.

Here is what we said about Dr. Greenspan’s earlier, and now discredited, view that there was no need for regulation that raised boardroom standards:

If we are to take Dr. Greenspan at his word, during the time he headed the Fed he didn’t see the need for changes in governance when huge corporate icons were crashing down about him and taking the stock market with them. He didn’t see the need for codes of ethics that would have protected whistleblowers who tried to prevent Enrons from occurring. He didn’t see anything wrong with the hundreds of millions in loans boards were doling out to CEOs that were never repaid. He didn’t see anything wrong with audit committees that were meeting less frequently than compensation committees while permitting huge liabilities in “off book” arrangements. He wasn’t bothered by auditors who were making all kinds of fees from non-accounting jobs and were more interested in pleasing management than reporting on the true health of the books. He didn’t see a problem with paying CEOs hundreds of millions in stock options without expensing them on the company’s balance sheets.

We then asked the question:

What else can’t this man see?

The answers have been coming in battalions of destruction over the past couple of years. The landscape is littered with the ruins of the financial system, the deaths of century-old banking houses, withering consumer confidence in an era of spreading job losses and stock market decimation, and an avalanche of multi-trillion dollar government bailouts and interventions that few can fathom and whose eventual toll in monetary impact and taxpayer cost absolutely no one can accurately predict.

It is significant that one of the main features of the legislation he was telling high paying business audiences not long ago was unnecessary was a provision to make boards more responsible for overseeing financial risk. Risk, as everyone now knows, was the six-ton elephant that was running amok throughout Wall Street, creating disaster out of anything related to subprime mortgages.

We had a different vision of where the world was heading when Dr. Greenspan was trying to turn it back. Twenty months ago, we noted the following:

A global market that is becoming increasingly volatile and upon which so many depend for their livelihoods, their prosperity and very often their dreams, requires new rules for the road —not a free-for-all. In this complex environment that has too often in recent years experienced the consequences of those who play only by their own rules and tend to forget the trust from others they hold, a premium will flow to where the regulatory structure and corporate governance regime demand and produce transparency, integrity and ethics. Companies and markets that become synonymous with those values will enjoy a competitive edge. Those that do not will suffer.

Alan Greenspan is a poster child for an era that was too quick to raise up human beings to godly status and attribute to them, and countless CEOs who were thought to actually deserve the hundreds of millions they received, feats of vision and abilities that mere mortals could not begin to comprehend, much less imitate.

As it turns out, the Richard Fulds, Angelo Mozilos and James Cayneses could not even manage to keep their own companies –or their reputations- from falling into an abyss fashioned by an excess of greed, hubris and poor governance. No, it wasn’t what Dr Greenspan feared: too much regulation like Sarbanes-Oxley. It was exactly the opposite.

The greatest challenge to capitalism and economic stability since the 1930s is in no small measure the product of the unregulated and opaque actions of self-aggrandizing titans of excess, whose overweening ego and blinding greed seldom permitted them to see anything beyond more zeroes at the end of their next paychecks and whose approach to risk was the financial equivalent of the three-pack-a-day cigarette smoker. The boards that should have been the watchful stewards of shareholder interests, but failed thoroughly in that role -as they have in so many times of testing over the past 100 years- were happy to light the match as often as it was demanded.


And Alan Greenspan, it turns out, was somewhat less than the all-knowing font of wisdom he enjoyed portraying and the media and others delighted in extolling. His Congressional appearance was a testament to failure, or at least to the folly of heedless acceptance of a system that worked very well for a few at the top and gave little cause to its adherents, which included Dr. Greenspan, to consider anything else. Conventional wisdom can be such a pleasingly temperate island, especially when its most favored residents are the ones dispensing the wisdom and setting the conventions.

Dr. Greenspan’s testimony included this revealing note:

This modern risk-management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year.

That would be a revelation possible only for those in urgent need of a trip to the eye doctor. Normal vision, possessed by most ordinary men and women who have some experience seeing how the real world works and the costly recurring blunders of narcissistic and overrated leaders, would have advanced the conclusion by several years.

Alan Greenspan has been a gifted and erudite figure on the stage of American public policy for several decades. He has also made a number of mistakes. Far greater, however, has been the mistake of many observers who have tried to make of him more than the man of earth he really is. There have been occasions, we think, when he has taken those expectations a little too seriously.

Memo for the future: before society decides to elevate someone to godlike stature, make sure he can at least see beyond the next seven days.


Neal Hefti | 1922 - 2008
Published by Finlay ON Governanceon October 20, 2008in Music, Neal Hefti and Passings. 0 Comments


We like occasionally to take a break from the deafening cascade of crises and disasters punctuating daily life and turn to some other pursuits that make the world better. Music features prominently among them. The artists, composers and musicians who have come this way and left so much behind that has inspired and brought often indescribable joy deserve to be remembered.

Musician, arranger and composer Neal Hefti passed away last week. At a young age, he played the trumpet skillfully enough, but found his musical skills soon taking him into the world of arranging. He did key arrangements for Woody Herman and Count Basie. For Basie, he composed and arranged the classic Li’l Darlin’, a popular big band staple even today.

Continue reading ‘Neal Hefti | 1922 - 2008′

Outrage of the Week: Ten Million Missing Canadians
Published by Finlay ON Governanceon October 18, 2008in Campaign 2008, Canada, Democracy, Hot Issues and Outrage of the Week. 0 Comments

Canada, too, needs to turn the political page. That process is not assisted when citizens slumber while their political leaders tap dance silently across the stage in the dark, hoping that no one will notice how mediocre they really are.

Half-a-world away, in a country where hostile fire is heard on a regular basis, Canadians lined up to perform the sacred duty of every citizen: to vote. In one advance poll, more than 75 percent of eligible citizens serving in the Canadian combat mission in Kandahar exercised their franchise. Like their grandparents and great-grandparents, who, as members of the greatest generation fought to preserve democracy and defy madmen, they take voting seriously. Many of their comrades in arms have died for that privilege even in this bleak far off land of discord.

In towns and cities across Canada, democracy had a less familiar and imploring face. The line-ups to vote were shorter this year than in previous elections –shorter by 10 million voters. Unlike the United States, which appears to be on the way to producing a record voter turnout, Canada set its own record: its lowest voter participation in history. Only 59.1 percent of eligible voters went to the polls in the federal general election which elected 301 members of the House of Commons and, by extension, the country’s prime minister.

Nothing about this election really clicked with the Canadian citizenry. That seems odd in itself, given that the nation is at war abroad and battling a mounting economic firestorm at home. Canada’s currency was plunging during the course of the campaign. If a dollar falls in a forest of other currencies, will anyone hear it?

I suspect the more likely reason for this bout of apathy had to do with the perceived lameness of Canada’s national leaders. They are essentially dull and unaccomplished individuals of rather unheroic character whose life stories, curricula vitae and inspirational oratory seemed to fall short on the old impress-o-meter.

In the United States today, a phenomenon involving what we termed “the improbably presidential name of Barack Obama” is taking the American political landscape by storm. Voters in record numbers have been registered. Young people in historic waves are set to cast their ballots with an enthusiasm most doubted was possible.

There has been a yearning among Americans for a different kind of leadership that is capable of rising above pettiness and straightjacket-type stereotypes. The country has discovered that elections do have consequences. As both the folly in Iraq and the recent crisis in capitalism confirm, when leaders and policies become disjoined from the interests and values of ordinary people, when the privilege of elites becomes paramount over the primacy of stakeholders, society can find itself navigating a very perilous minefield.

America, once more, is preparing itself to write a new chapter in its historic experiment with democracy, and to pass the torch to a new generation of leader. It is a necessary task in restoring confidence in American leadership abroad as well as the confidence of Americans in themselves and their institutions at home. The journey along this road is both inspiring and riveting, and rarely uneventful. America, it appears, loves times when it is about to make history. No such prospect seems in the offing for Canada.

These facts may well account for what happened in that country last week. So dramatic was the contrast between the two national election campaigns that the excitement emanating from the United States made the Canadian political scene look even more like the embalmed creation of the local undertaker than it normally does. I’ve spent a lot of time over the course of 30 years working for and advising some who have held or aspired to the highest offices in Canada. My experience compels me to make this personal assessment.

Canada had a history of electing grey haired elder statesmen as its head of government for generations. Then John F. Kennedy was elected the 35th president of the United States. Eight years later, Canada discovered a man who was viewed as its own JFK, in the smart, youthful and sometimes irreverent, world-travelled Pierre Elliott Trudeau. He animated elections in a way that had never been seen before. Voter turnout set a record. He became Canada’s 15th prime minister and the rest of the world took note.

Someday the Canadian landscape will change again and find a new figure to excite weary generations, raising the country to new heights of self-confidence and global accomplishment, as Trudeau did. It may be a leader who is not even on the horizon right now. It might even be Trudeau’s son, Justin, who was just elected for the fist time to the House of Commons. But someone will appear on the scene to reinvigorate this somewhat somnolent democracy that has taught many nations important virtues about governance and has stood tall when the cause of freedom was in peril.

None of this excuses the millions who could not be bothered to show up last week, however. At a time when the nation has asked its young people to put their lives on the line, every Canadian had an obligation to at least support their troops by exercising the right to vote. This is how citizens remind the governors that they are accountable to the governed.

Canada, too, needs to turn the page. That process is not assisted when citizens slumber while their political leaders tap dance silently across the stage in the dark, hoping that no one will notice how mediocre they really are. Such political types are not terribly bothered by the lack of turnout; they thrive in a climate of uninvolved citizens who are loath to ask hard questions or demand higher standards from the people seeking office. Growth in an already over abundant class of untalented and self-serving politicians is never to be lightly tolerated. So it is the shortsighted actions of those 10 million Canadians who never showed up that are our choice for the Outrage of the Week.

Did AIG’s Board Finally See the Flashing Lights in its Rearview Mirror?
Published by Finlay ON Governanceon October 16, 2008in $700 Billion Bailout, AIG, Board of Directors, CEO Compensation, Corporate Governance, Hot Issues, Subprime Meltdown, Wall Street Bailout and Wall Street and Main Street. 0 Comments

The law has finally caught up with the stumbling insurance giant’s out-of-control compensation and highflying junkets.

It took the sight of flashing red and blue lights in their rearview mirror before the visionless directors of AIG finally got the message about their failures and shortcomings. Last week, we commented on the excesses in executive compensation and numerous public relations disasters that have occurred on their watch. That was, of course, in addition to the complete meltdown of the company that resulted in the U.S. government’s huge bailout. We said at that time:

AIG’s directors should either get a grip on the company and show they comprehend the new public dimension to their duties, or they should find another line of work.

Yesterday, New York state’s top cop and Attorney General, Andrew Cuomo, sent a blistering letter to each member of AIG’s board demanding that they shape up and behave like the trustees of billions of dollars in public funds which they have become. As Mr. Cuomo wrote:

In the last several months, as AIG was teetering toward bankruptcy, and operating with unreasonably small capital, AIG nevertheless made numerous extraordinary expenditures in the form of executive compensation payments, junkets, and perks for its executives.

The letter went on to demand:

…the Board should immediately cease and desist these improper and extravagant expenditures which exploit the taxpayers of this Nation.

Today, in the wake of yet another revelation -this time, AIG executives taking a private jet to enjoy an $86,000 weekend of pheasant shooting at an English estate- the company announced a new policy to retrain pay, account for previous compensation deals and end highflying parties.

Is it possible the sirens of public outrage have finally awakened the slumbering insurance giant’s board? Stay tuned.

WTF that was too long, way to screw up the page for everyone.

ROTFLMFHO!!!!!!!!!!

With today's close $0.59 (5.9 cents) NT has hit yet another all time low. How many days can it continue to do this? Of course share price isn't the end-all-be-all and it certainly doesn't directly affect daily operations but if anything it's an extreme vote of no-confidence for Nortel executive management & BoD.

Forgot to add: I am fed up with the claims that the low share price is the result of a "negative media" or just because of "angry people". Yes, a lot people dislike Nortel because they lost money in the dotcom crash. And yes, the media covers Nortel news. But angry people still want to make money and aren't going to drive the company down unless they can profit from it. (Why would they expose themselves to such much risk taking huge shorts just to vent anger?)

And the "negative media" is BS, plain and simple. The media covers facts, and yes they have covered bad Nortel news but guess what, most of the news about NT has been bad. Sure they got some wins with London 2012 and Vancouver 2010 but really what does that mean in the long run when the accounting statements are negative?

I keep hearing from the higher-ups about these things as if it's some sort of "conspiracy" to keep NT low. The only conspiracy has been from Nortel execs, past and present.

Market cap is below $300 million. NT is becoming a joke. If you bought in 5 days ago, you lost >50%. 1 month ago, -64%, 3 months and it's a 90% loss. With this rate of decline it doesn't really matter when you bought in, you pretty much have a write off.

Mark,

you forgot Extreme Networks (EXTR). They are 215 million and have maybe a 1000 employees. Nortel will be at this level when its at 45 cents. This will happen next few days.

Anybody know what Barry Richards has to say about Nortel now? I wonder if he is still bullish?

Same Mkt Cap than Netgear....and Netgear has only 520 employees! something is wrong!

Netgear was a part of Bay Networks, which was bought by Nortel. It then became independent in 2002. Probably a good move.

*edit*
A good move for Netgear.

Unfortunately, any interested party is awaiting Nortel's plunge into bankruptcy. In this cash crunch / slow business environment, no one is going out on a limb to buy a money losing business . And of course, Nortel has almost nothing of value to sell.

Back in 2005, Gary Kunis had hand shake deals with Nokia and Siemens that would have sold off certain pieces of Nortel for over $2B but Bill Owens & the Board did not want to exit any businesses - even a money losing business with negligible market share and expensive and nonproductive European headcount..

Nortel is 3 years late in attempting to sell off assets for anything of value. The Board and its Exec management teams have always had the delusion that a poorly funded mediocre technology Nortel could compete in all markets against all companies.

Gary Kunis thinks he can walk on water too, so I have my doubts. In reality, Gary Kunis' biggest asset is his ability to do whatever Gary Daischendt tells him to do.

Liquidation is on the go ..... now trading at 56 cents.

Now that Nortel is a penny stock again, I guess large cap mutual funds that still hold the stock will have to liquidate. Add to that the end of the year sale for tax purposes and you have the ingredient for a stock going further down.

The realignment may be a sign that they are thinking about BK. If they are putting sales, r&d, marketing, services back in the 3 business units, then each one is standalone. It looks like they will selloff or spin out the divisons. The weakest link in the chain will be left as Nortel with the pensions, debt and tax burden. This would be easy to fold under BK.

... another option is file chapter 11. quicker the better to restructure under protection.

well well. my prediction of 50 cents is coming soon. I said it would pass Ciena and Tellabs in market cap. I said it would meet and pass Extreme the smallest tier-2 in market cap (213 million).

no surprise. Nortel is now 322 million. 100 million to go. just yesterday it was 200 mill to go.

getting there. if it does i am seriously going to consider becoming an analyst.

correction 58 cents and 287 million market cap. 67 million more to go. can it happen today for me to reach my prediction from 3 months ago.

52 cents low today, a nickle presplit... yikes... making all time lows the rule than exception now it seems

so much for the CEO's $20 buying opportunity August 2007, good grief

-$5.2-billion debt + pension deficit.+ $2.3-billion cash= -$2.9B

paying $293 million for a negative $2.9B does not make cents

k... what if...(huge if, huge...just for farts and giggles sake)
2.9B +500M for MENS = -2.4B

k?... then

2.4B -Carrier +Enterprise? anyone? anyone?,.... still minus isn't it... like I said... yikes!

=)

Nortel would have to pay the buyer and it does not have the money
Besides, why pay for a company that can be given to you for much less from the trustee when (not if) it folds

NT.PK should be 5 cents
NT at .59 after extreme 10X extreme split makes a laughing stock out of the NYSE

just remember that even a broken watch shows correct time twice a day. having said that, i'm sure you'll do fine as an analyst, just don't let this "victory" get into your head :)

Wow...that's profound.....

thanks! perhaps exnt2 and i should open up security analysis shop together and give the security analysts of yesterday the run for their money :)
since we are both exnt, time tested and universally recognized intellectual superpowers and some such :)))
all that's needed is your funding.