Would You Invest in the New Nortel?

By Mark Evans | Published: February 17, 2009

This article on Fortune.com about bargains within the high-tech sector caught my attention because it mentioned Nortel in lede.

Of course, it’s not possible to purchase Nortel shares after it filed for bankruptcy protection last month. But it did get me thinking about how much of an appetite investors may have when the New Nortel emerges in a few months.

While the New New will likely be privately held by creditors, bond holders and management, at some point it will likely go public again to raise capital and re-establish the company’s profile.

When that happens, it will be interesting to see how much of an appetite there exists for Nortel given all of its troubles and strategic stumbles over the past decade, including the three-year reign of Mike Zafirovski.

A lot, of course, will depend on what the New Nortel looks like and the economic and competitive landscape.

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  • The psychiatrist

    If Mike Z or anyone one of the current BOD members are involved in the “new” Nortel then I wouldn't touch Nortel with a ten foot pole-come to think about it,I wouldn't consider the new Nortel as an investment at all,because even if Mike Z or any of the remaining BOD were no longer involved,there's still the risk of some of the current management making their way to the new Nortel and as far as I'm concerned that's a cancer that I would stay away from.

    It's amazing that Mike Z has no shame coming out and making a video in an attempt to restore any kind of reassurance to all involved-this is a CEO who was telling investors just 18 months ago that Nortel was a good buying opportunity at $19 a share,just goes to show how little he knew when it came to the financial health of the company he was running,yet his excuse was the global recession-well I say what about Cisco?,what about ALU?,what about Java?,heck even Motorola has weathered this current global economy better than Nortel.

    Get a clue Mike-time for you to resign and preserve what little integrity you have left…..I mean it!

  • Anon7

    No. Forbes is not exactly an accurate harbinger of the future. The chances of Nortel surviving are dwindling by the day. This week Verizon will announce their selections for LTE suppliers; even NT LTE product managers don't believe they will be chosen. Not honoring commitments to employees is one thing, but major customers take it very seriously when their suppliers don't honor their commitments to their own suppliers … it puts risk into the supply chain and thus risk to an operator's business plans. No company, let alone one as large as Verizon, is willing to risk that. The one business unit that was keeping Nortel afloat since the tech bubble burst is floundering.

    The telecom infrastructure business has been in consolidation for several years. Nortel, through a combination of hubris and mismanagement, has missed a window of opportunity to reinvent itself for the future.

  • Another_Nortel_Watcher

    I don't think the general investment market will have anything to do with Nortel as long as MZ and his equally incompetent stooges are running the company. Just a hunch. If, on the other hand, the new Nortel has a credible leadership structure with an appropriate track record (i.e., NOT light bulb factories) then I'm sure investors will be sniffing around for a buying opportunity.

    As a suggestion, every time someone in the new Nortel says “six sigma” or “black belt”, they should have to put $5 in a charity jar.

  • Cataractus

    Good point about Nortel's shaky supply chain. This probably puts Nortel out of the running for any major new contracts until (and of course, if) it emerges from chapter 11.

  • less

    Yeah that question sounds vaguely familiar -

    Would I get back together with my ex, who “invested” every cent she and I ever earned on Starbucks (coffee, not stock) ?

    If she came around with my lost wages in hand and offered to give me that money back I suppose we could talk. I don't know that Id demand the cash back and just turn and run.
    But in all reality I can't expect her say anything beyond: “give me one more month”, “one more grand is all I need”, “love and devotion overcome all obstacles”, and the clincher “believe in us”.

    Without proof – without the cash – none of her promises mean anything to me. $0. Zip. Zero. Not from her, Nortel or anyone else. I already gave at the office.

    Again, I didn't get burned by Nortel in any way, but their pitches sound all too familiar and rehearsed for me to trust, even from the outside.

  • broadbandbill

    It was easier to turn Nortel around 3 years ago when optimism was high, the credit markets were flowing and Nortel still had a lot of ‘good faith’ value. And what did current management do—screwed things up royally.

    So I ask rhetorically: What chances do they have in this very dire situation. My take is they really believe Verizon will choose them for LTE. Even if that were the case (a super long shot), their MO has been established; clueless, visionless and execution-less…–bb

  • yes4aapl

    Assuming that Nortel would survive CH11 and restructure the company to the point of being profitable in the markets Nortel will do business in, assuming that, retail investors will not be back in that investment for the long term investment. That new stock would be issued for big financial institutions and slowly unloaded on new fools _retail investors. Canada knows how to fool new retail investors again and again…
    but maybe, just maybe, to avoid such fraud in the future, maybe creditors can do something radical once and for all.
    so lets go back one step to invoke discussion how and if Nortel will restructure under CH11?
    How to restructure Nortel?
    That’s the question customers ask. That’s the question suppliers ask.
    What business Nortel wants and how Nortel can be profitable in that business?
    What Nortel would have to do to be profitable and competitive?
    As you well know customers will not flash money before the Plan is known and accepted!
    As you well know, suppliers are demanding their rights be respected to the point of filing their complains to the BK judge,.
    Also employees have to know their rights are respected in all the restructuring actions!
    and that is so difficult for me to imagine that Nortel has been doing its best, connecting all the pieces of that puzzle.
    Time table shows that Nortel won't be able to start restructuring before ch7 comes.
    There is no way to stop the bleeding, imho
    Call the priest! Start the prayer! Donate harvested organs for good use!
    In other words why we waste time talking about new new NT stock?

  • wasnortel

    You can still buy my shares on the TSX!

  • Ex_Nortel

    I doubt Nortel will emrge from bankruptcy in anything but name. And I would not put one penny into it if Mike Z, his GEniuses, and the current BoD are still in control.

    This is just another buggy whip company going out of business, Cisco, Nokia, Microsoft, oracle, Google, etc are laying the ground work for their futures and Nortel is till trying to fix problems from the 1990s.

  • exnt2

    no

  • longgone

    playing the lottery would give a better return than putting money in NT

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

    It's hard to see how anyone could entrust this gang of GEniuses and thugs with anything of value, much less money at this point.

    They have consistently shown themselves to be hidden and opaque as opposed to the transparency that they have so often claimed!

  • ExNtrl

    Before you invest in Nortel, I would like to show you a bridge in Brooklyn I would like you to interest you in buying..If the bridge doesn't interest you, I have some land in the Florida everglades that might spark your interest…LOL …no I wouldn't invest in the GEniuses and the current BoD.

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

    It's hard to see how anyone could entrust this gang of GEniuses and thugs with anything of value, much less money at this point.

    They have consistently shown themselves to be hidden and opaque as opposed to the transparency that they have so often claimed!

  • ExNtrl

    Before you invest in Nortel, I would like to show you a bridge in Brooklyn I would like you to interest you in buying..If the bridge doesn't interest you, I have some land in the Florida everglades that might spark your interest…LOL …no I wouldn't invest in the GEniuses and the current BoD.

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