All About Nortel

Motley Fool compiles a list of “deathbed stocks” based on assessing their liquidity and ability to pay their bills using the current ratio and quick ratio.
Here’s Motley Fool’s criteria:
“A current ratio above 1.5 and a quick ratio north of 1.0 means it’s able to meet its short-term operating needs. We’ve also added the Altman [...]

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While Nortel talked about a “challenging” business environment after posting its second-quarter results last week, Cisco took a markedly different stance after posting solid fiscal fourth quarter results yesterday.
Cisco said it had “very strong” confidence in its long-term growth targets of 12% to 17%, while Cisco CEO John Chambers added that: “During each economic slowdown, [...]

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Frank Burch wants to know….
When, in fact, should NT get credit for deferred revenues?

- No one gives them credit when they get the cash for the sale. In those quarters, people say they missed their revenue numbers. At that point, they have to defer the revenue until some [...]

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Citing Nortel’s “revitalization efforts and its improved business model”, DBRS changed its trend on the company’s debt to “positive” from “stable”, while confirming its B (low) rating for Nortel’s short and long-term debt. DBRS also established an issuer rating for Nortel at B (low).
“The foundation for growth at Nortel has been developed by a largely [...]

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Is Nortel trying to sneak one by us Canadians?
How else to explain the company’s decision to release its second-quarter results on August 1, the day before a long weekend when many Canadians are paying more attention to whether the weather will be hot and the beer cold.
Nevertheless, Nortel will post its results at the crack [...]

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As Nortel moves to re-size itself to lower operating costs and create competitive cost structure, it has been interesting to see how the company’s real estate footprint in North America is shrinking.
Nortel recently announced it will close a 59-acre campus in Calgary where it operates a 400-person R&D facility, which was built in the 1990s [...]

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Not only did Nortel sell $500-million of bonds earlier this week, but Standard & Poor’s gave the company some good news when it affirmed Nortel’s “B-minus” credit rating while changing its outlook to “positive” from “stable”.
“The revised outlook primarily reflects the steady improvement in profitability in the past several quarters despite difficult market conditions,” S&P [...]

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Just in case you were wondering, Nortel still expects revenue to grow in the low single digits this year, while gross margins will be about 43%. Analysts expect Nortel to have sales of $11.2-billion compared with $10.95-billion in 2007.
Source: AP

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By Frank Burch

The Curious Deferred Revenue Issue and Jaded Analysts
Street analysts again distinguish themselves by fixating on and misinterpreting the LG JV and deferred revenues. Many an analyst had some knucklehead comment when, in fact, NT blew out the numbers…with or without the JV. Part of the blame should go to Nortel IR [...]

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Lehman Brother analyst Inder Singh of Lehman Brothers is maintaining his “equal weight” rating on Nortel but reduced his target price to $17.00 to $15.50.
In a research report, Singh said Nortel’s Q1 revenues and EPS were ahead of the estimates and the consensus. That said, he reduced his EPS estimates for 2008 and 2009 to [...]

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