No Telling About Nortel

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.


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