RIchards on NT

By Mark Evans | Published: November 16, 2008

Canadian Press has a story on Nortel featuring some attention-grabbing quotes from Paradigm Capital analyst Barry Richards, who has been the most bullish analyst on NT this year.

On why he has a $5 target price, and RBC Capital Markets’ Mark Sue now has a target price of zero:

“I’m of the view that either he’s right or I’m right and that everyone else in-between can’t possibly be right.”

On why he thinks Nortel is worth at least $5/share:

“The business should be worth a lot more than $5 a share, unless they run out of cash.”

Richards told CP that Nortel’s wireless equipment business is worth US$2 billion, the optical equipment business US$3 billion, and the enterprise division at US$5 billion — once they each absorb parts of Nortel’s services business, which runs networks for customers.

More: Larry MacDonald, who owns Nortel shares, remains optimistic that Nortel has upside.

Technorati Tags: ,

[Slashdot] [Digg] [Reddit] [del.icio.us] [Facebook] [Technorati] [Google] [StumbleUpon]
This entry was posted in Analyst Coverage, Financials. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.
  • protosphere

    deja vu?

    http://www.247wallst.com/2008/06/analyst-nortel…

    June 06, 2008 – Analyst: Nortel At $23.00… Gutsy or Crazy? (NT)

    A Canadian boutique firm called Paradigm Capital Inc. issued a rather extremely bold call on Nortel Networks Inc. (NYSE: NT) this morning. Paradigm noted how unusually low the valuation is on the stock with a $4 Billion market cap after a near-70% drop over the last year,

    When you see calls looking for a 200% gain in a turnaround stock, its hard not to notice.
    This call is either one of the gutsiest calls that could be made…. or one of the craziest.

    So far Wall Street isn't fighting the tape as Nortel shares are down 5.5% at $7.67 right before the close.
    ____________________________________________________

    A $23. target when it traded in the mid 7's in June, and now a few months later he calls for $5 in the 50 cent range… sorta speaks for itself don't it.

    He called the stock “profoundly undervalued” where his credibility and reasoning has proven to be profoundly absurd in my opinion. There was another analysts from Citibank a ways back who was also bullish too, giving a whole new meaning to this term bullish in retrospect =)

  • Another Nortel Watcher

    Richards and Sue are BOTH right, depending on how things unfold.

    If the board fails to act and Mike Z remains in place, Sue is right. It's only a matter of time.

    If the board finally wakes up, flushes Mike Z and replaces him with someone who knows the business, Richards is right.

    NORTEL BOARD – WHERE ARE YOU?

  • seeker

    Optical businees is worth US$3 billion ! Well it is for sale now for much less and where are the buyers ?

  • Mr Real

    Yes, NT can hit $5. no question about that.
    Why would i say that?
    Because I was a vegas casino once and saw black 16 times in a row with my own eyes. and no, next one wasn't red either, it was 0.
    would I tell you after such an experience that NT can't hit 5?
    That would be irresponsible now, wouldn't it? :)
    Having said that . . .
    Making a $5 target on NT is also irresponsible for an analyst, imho.
    Unless he has a model he can share with us, let's say DCF model based on specific numbers, not on feelings, i'm not interested in hearing his bold predictions. But they rarely ever show their models to the public. WHY NOT? because it's much easier to criticize as insane model than to criticize a WAG number. People would always look at the WAG number and think . . . maybe there is something to it after all, maybe this guy knows something . . .

    I love the “unless they run out of cash” clause.
    You know what, there are GM bonds out there, face value $25 per share, trading at under $4. BUT THEY ARE WORTH $25 UNLESS GM RUNS OUT OF CASH!
    What does that mean exactly? Should i go ahead and buy those because UNLESS GM RUNS OUT OF CASH i should make a huge profit. What if GM is 99% likely to run out of cash?

  • broadbandbill

    For all of those that called for Proto’s ousting I suggest you see his post below; I just wish Wall Street’s ‘investigative journalists’ do half as good of job as Proto does.

    Bravo Proto, keep it up…–bb

  • fx

    Nokia-Siemens and Ericsson as the two likely buyers of NT. NT's CFO was Marconi's CFO and it was sold to Ericsson.
    Deal likely to be closed by EOY

  • fx

    The Chairman is the one that selected MIke Z and the other new BoD members are Mike's friends… some NC university teacher who she has no clue

  • Another Nortel Watcher

    Question: Can you name two companies with $10B annual revenues with a market cap below $500M? I can't off the top of my head. Nortel's value is being strangled by lack of confidence. Mike Z has used up three years worth of patience and burned up billions dollars so the only thing that will release the stranglehold on Nortel's lifeblood is for Mike Z to GO!

    MIKE Z – IT'S TIME FOR YOU TO GO. NORTEL BOARD, AR YOU AWAKE?

  • Greg

    I have been at Nortel for a total of 15 years and worked in several companies in between and believe me there are many large telecoms suppliers who are worse than in Nortel in their processes and products

    Nortel is definetely not worth 60c, however I think investors are sending a msg to the execs that they are not doing what they should be doing.

    Most senior people in Nortel will tell you the MEN announcement was done in the least professional way and many other strategic decisions have been botched.

    Botom line is that Mike Z has failed and its time to go.

    As far as bakrupcy I think its all just speculation . Nortel has cash to survive another 2 years and by then the capital markets will have come back. Chances are Nortel will sell some business units as the market inproves and they will refinance their debt in 2011. Will they gte refinanced…I think wthy will as long as there is confidence in the team at the top as it makes no sense for creditors to end up with a worthless company when they can extend the debt and recouo money down the track

  • Clint

    Mostly accurate comments but the way NT (Mike, Roese and the BOD) have handled the reins makes me think it is too late.
    The horse is out of the barn and they can't find it.
    Time after Time NT have been making poor strategic and headcount decisions. They are in a position now that they can't even shitcan useless executives, admin, specially titled employees who contribute nothing, and managers (which they should have done long ago given the brutal manger to employee ratio). Everytime they make a decision it seems to be the wrong one. I hope they can sell off what they have left before it is dismantled within.
    CDMA, MEN and LTE must be sold. Doesn't matter about enterprise. It will cease to exist when it is on its own, bought out or swallowd by IBM, Microsoft or Cisco. Too many competitors in that field and enterprise for them is at best Tier 2 in that playing field. To close, the current NT debacle has weakened the enterprise position just like it has with every other NT LOB currently caught in Limbo. Of course the current economic downturn just emphasizes again how NT make the wrong choices at the wrong time. The joint venture in enterprise won't save them.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    They've been asleep at the wheel for some time now. Unfortunately it may be up to stockholders to vote them out but I don't see that happening any time soon.

  • exnt

    I want what Barry Richards is smoking.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    One only need look at this fool's past “predictions” to gauge the accuracy of this newest prophecy.

    He will still be predicting NT at $2-3/share when it is $0/bankrupt.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    Gotta love his qualifiers, “unless they run out of cash”. Basically he is saying “I am right unless I am wrong” And he is 99% likely to be wrong.

    Useless ANALysts.

  • dataguy

    One thing no one is talking about on any of these reports is what Nortel customers are thinking. I can’t comment on the telco part of this but can on the enterprise side. My disclaimer in this is that I’m a network engineer that has been using Cisco since the early 90s, 92 or 93 when all they had were AGS. That being said, voice folks use Nortel and Data folks use Cisco. At most big companies, voice has lost favor and now have moved under the control of the data folks (payback time?). The business cost models of Nortel are foreign and I think overpriced. Nortel is very hard to deal with. When I want information, I can go ask a Cisco rep or talk to an engineer within Cisco. When I try to do it with Nortel, they won’t talk to us. They just tell us to go see our channel partner. And we have a lot of Nortel equipment. (over 800 sites).

    I feel that Nortel has lost the small office business because there are a lot cheaper systems to deploy. A lot of providers that provide a service to a small to medium company are using other systems because of the lack of response from Nortel. That leaves their big base install systems. We are looking at replacing all of our systems with a centralized managed system. Nortel costs are way way out of line with everyone else, so we are no longer looking at them as a viable option. (this goes for Aviva also, their support cost are way out of line).

    We are no longer talking about needing to upgrade any of our BCMs or 0x32s because we are talking about what do we do when Nortel is gone?

    I have talked to several reps from Cisco and they are getting calls from Nortel people asking if any jobs are open.

    I know that I will get flamed, but sometimes reality hurts..

  • exnt

    I want what Barry Richards is smoking.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    One only need look at this fool's past “predictions” to gauge the accuracy of this newest prophecy.

    He will still be predicting NT at $2-3/share when it is $0/bankrupt.

  • http://nortelinsider.wordpress.com/ Desk Jockey

    Gotta love his qualifiers, “unless they run out of cash”. Basically he is saying “I am right unless I am wrong” And he is 99% likely to be wrong.

    Useless ANALysts.

  • dataguy

    One thing no one is talking about on any of these reports is what Nortel customers are thinking. I can’t comment on the telco part of this but can on the enterprise side. My disclaimer in this is that I’m a network engineer that has been using Cisco since the early 90s, 92 or 93 when all they had were AGS. That being said, voice folks use Nortel and Data folks use Cisco. At most big companies, voice has lost favor and now have moved under the control of the data folks (payback time?). The business cost models of Nortel are foreign and I think overpriced. Nortel is very hard to deal with. When I want information, I can go ask a Cisco rep or talk to an engineer within Cisco. When I try to do it with Nortel, they won’t talk to us. They just tell us to go see our channel partner. And we have a lot of Nortel equipment. (over 800 sites).

    I feel that Nortel has lost the small office business because there are a lot cheaper systems to deploy. A lot of providers that provide a service to a small to medium company are using other systems because of the lack of response from Nortel. That leaves their big base install systems. We are looking at replacing all of our systems with a centralized managed system. Nortel costs are way way out of line with everyone else, so we are no longer looking at them as a viable option. (this goes for Aviva also, their support cost are way out of line).

    We are no longer talking about needing to upgrade any of our BCMs or 0x32s because we are talking about what do we do when Nortel is gone?

    I have talked to several reps from Cisco and they are getting calls from Nortel people asking if any jobs are open.

    I know that I will get flamed, but sometimes reality hurts..

  • TwitterCounter for @markevans
  • Seeking Alpha Certified