RBC Analyst: Nortel Networks Needs New Strategy

Aside from the fact that shares of Nortel Networks Corp. (NT) saw its biggest declines since 1980 after unveiling disappointing sales numbers, restructuring and cost reduction plans on Wednesday, there is a growing chance that it needs a new strategy altogether.

Nortel indicated that it is in early talks with several buyers for some of its assets, as it needs more such sales to strengthen its balance sheet.

RBC Capital Markets analyst Mark Sue told clients:

With softening demand and increased competition, Nortel may need to once again retool and refocus as it looks to find its position in a consolidating industry.

He cut his price target on the stock to $4 from $6.

Mr. Sue said:

Nortel’s Metro Ethernet optical business, one of its faster-growing segments with a projected compound annual growth rate of 10% and a potential market size of $2-billion is one that is up for sale. But the company’s peer groups in optical have also suffered, so Nortel’s timing could be better.

Comments

[longoil:]

Nortel also needs people in the upper management who can do basic math.

Philippe Morin (president of MEN) was quoted this morning as saying the MEN division should fetch 2 billion dollars.
www.lightreading.com/d...


As of this morning the entire company had a market capitalization of $1.4 billion. You would think someone with an MBA like Phil would wonder why someone would pay $2 billion for a slice of the pie, when the can buy the entire pie for $1.4 billion.

No wonder this company is dying.

2008 Sep 18 03:19 PM