law1985

How Worrisome is Nortel's Exploration of Bankruptcy Protection?

Management and the BOD are acting responsibly by investigating every alternative. The status quo has been rejected and the reasonable alternative is restructuring with creditor protection as the fall back position, if they are unable to realize significant value from asset sales. The worst case scenario is already built into the share price.

I am not sure that a potential interested acquiring party can afford to wait to buy assets from a forced liquidation. For instance, the US infrastructure spending stimulus, which includes broadband, will be implemented in 2009 and 2010, in order to participate a supplier needs to be ready yesterday.

I am not a fan of Mike Z....but he is a competent financial engineer. He needs to do what IBM did in the early 90s despite screaming employees, demanding pensioners and furious shareholders. Notice how quiet the debt holders are...

Management is also providing a lot of information. Preannouncements and financial details are forthcoming in a timely fashion. Furthermore, there is nothing wrong with press releases.

What Would John Chambers Have Done for Nortel?

NT has lost $8 billion of market cap in the last 12 months, while CSCO has lost $80 billion...

Nortel Networks: 5 Big, Unanswered Questions

Regarding point#5, the company is much too solvent and liquid to qualify for Chapter 11 protection in the US or any kind of restructuring under the Companies Creditor Arrangement Act (CCAA) in Canada.

Depending on 2009 sales, the earliest timing would be late 2010. There needs to be a sense of immediacy regarding financing shortfalls to justify bankruptcy. The bankruptcy mechanisms are not meant to be abused by viable solvent companies simply seeking to reduce their debt load.

As matter of fact, Nortel could probably actively buy back some of its outstanding debt and retire much of it at a cost of less than 80 cents on the dollar. The resulting tax free gain and savings in interest would provide more bang than a share buyback.

Your tone sounds desperate. Why not focus on CanWest, Air Canada or Teck Cominco? At least those companies are nearer to insolvency than Nortel.

Nortel: Is it Time for a Change At the Top?

Mike Zero is grossly overpaid ($10Mil), so he probably has a very generous parachute. He could not change a corporate culture that was bureaucratic. This company was run for the benefit of employees not shareholders. Now management wants to sell assets and use the proceeds to pay for severances....what a surprise