Morgan Stanley Downgrades Nortel

Morgan Stanley analyst Scott Coleman has downgraded Nortel to “equal-weight/in-line” from “overweight/in-line”, and reduced his revenue and EPS forecasts for 2006. In a research note, Coleman said the downgrade was prompted by a decision to reduce revenue estimates after a “deep dive” into the Indian wireless market – where Nortel has a money-losing contract with BSNL – and checks on spending plans by carriers on optical networking equipment, and concern about Nortel’s prospects in the enterprise market. “We still expect cost structure improvement this year but have tempered our outlook, as we believe it will take time for the new supply chain management team to wring out operational inefficiencies.”

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