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Summary:

Nortel-watching can be a pretty boring task. The Canadian network equipment company, which was once sold over $80 a share but now trades at $2.13, has made a big deal out of its plans to turn around the company with new markets and a new CEO. […]

Nortel-watching can be a pretty boring task. The Canadian network equipment company, which was once sold over $80 a share but now trades at $2.13, has made a big deal out of its plans to turn around the company with new markets and a new CEO. But to date the company hasn’t shown any significant moves on the road to recovery.

One of Nortel’s plans is to target the WiMAX market, and according to an RBC Capital Market report called “Extreme Makeover: Nortel Edition,” Nortel will introduce its MIMO-enabled WiMAX base station and gateway at Wimax World later this week. Beyond WiMAX, the RBC report says Nortel is focusing on IMS, IPTV and 4G, and the analyst has a target stock price of $3. The report doesn’t blatantly say Nortel sucks, but is so conservative that its the equivalent of saying, “Well, Nortel probably won’t get any worse.”

Maybe that’s because Nortel’s makeover plan has been murky at best. RBC puts it well when they say: “Nevertheless there may be increasing variability for 2007 estimates as Nortel continues to restructure while simultaneously attempting to ramp new products. We look for further clarification of Nortel’s strategy at its analyst day.” We do too.

  1. I really believe Nortel is in an excellent position going forward, if they execute. Nortel is on the forefront of mobile and IP technologies. That fertile soil, combined with trimming the dead branches, could lead to a healthy future.

    As a potential investor, the only real drawback is their financial baggage from past problems. It’s priced in by now, so I believe Nortel is a good value. It will take a patient investor though, as this tree may not bear fruit for awhile.

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  2. As an investor in Nortel I think that this company will see a strong finish to 2006. One in which they will show profits and the potential for much greater profits. Nortel is in a position of leadership in many of its markets and this will prove to be its greatest asset in its restructuring. A patient investor will have a large return, but a short term investor will also be rewarded in my opinion.

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  3. katie,
    nice to see someone else is blogging about nortel’s troubles these days.

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  4. I have been watching Nortel with great interest. Seems to me that Nortel has potential but just did not have its house in order. Strange that they had so many accounting problems. However, I do think that with good management, the company can do well once they get all of the brush out of the way.

    I’m buying in!!

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  5. Nortel’s “trimming the dead branches”, is it? Getting the “brush out of the way”? What does it say to you when a company has laid off close to 80% of its workforce – makes for a lot of dead branches, don’t you think?

    And why, despite revenues in the billions of dollars, is it still unable to turn its fortunes around? Just how inept and incompetent – or self-serving – does executive leadership have to be for this dismal a performance for 8 years running?

    Just how many lifetimes constitute “long term” for you Nortel cheerleaders? I suspect toilet paper would be a better investment than Nortel stock, at this point – that’s about all it’s good for.

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