The New York Times has an interesting story comparing Nortel with Kodak – two companies burdened with debt, declining sales, and the need to sell good assets.
One “error” in the story is the suggestion Nortel could get up to $1-billion for its metro Ethernet network business. In this economic climate, that would be a major accomplishment.
We know that the MEN business has recognized $1.022 Billion in revenues as of Q3, 2008. With this, one could easily expect the annual revenues to be around $1.250 Billion for the year plus some additional Deferred Revenues given how major optical projects get deployed and the GAP accounting rules in play.
I personally think that 1 x Revenues is a reasonable price but given the current market conditions it is very difficult to understand if this still holds water or what Revenue multiples are reasonable to an acquisition of this type.
GrabYourNeck
In this economic crisis, I think it will be very hard for Nortel to sell MEN at their asking price. Potential sellers will definitely “wait and see” until the price drops to a firewall price. Besides, this is the golden time for Nortel competitors to steal away Nortel's customers without buying MEN. I really don't expect those incapable Nortel executives and Board of Directors can turn Nortel around. They are given the chances to prove that they are a bunch of useless management material. It is so upset to see Nortel coming to this situation.
GrabYourNeck
In this economic crisis, I think it will be very hard for Nortel to sell MEN at their asking price. Potential sellers will definitely “wait and see” until the price drops to a firewall price. Besides, this is the golden time for Nortel competitors to steal away Nortel's customers without buying MEN. I really don't expect those incapable Nortel executives and Board of Directors can turn Nortel around. They are given the chances to prove that they are a bunch of useless management material. It is so upset to see Nortel coming to this situation.
Nortel vs. Kodak
The New York Times has an interesting story comparing Nortel with Kodak – two companies burdened with debt, declining sales, and the need to sell good assets.
One “error” in the story is the suggestion Nortel could get up to $1-billion for its metro Ethernet network business. In this economic climate, that would be a major accomplishment.
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