Nortel Stock Split Reversal

So Nortel is thinking about a reverse stock split, which makes sense when you have nearly FIVE BILLION shares outstanding and stock option programs that provide senior executives with ways to get their hands on millions of shares. This isn’t the first time Nortel has raised the idea of a stock split reversal – the idea came up a few years ago when the stock fell below $1 and the NYSE contemplated a review of Nortel’s listing. While a stock split is a logical thing to consider, it’s not the best PR move given management should probably be more focused on fixing operations and doing things to gain some strategic momentum. Orion Securities analyst Duncan Stewart expects Nortel will probably want to do a one-to-five or one-to-10 reversal given shareholders gave the the board authorization in 2003 to pursue this kind of consolidation. He said Nortel will be aware of Agere’s recent move, which saw its share consolidated at $12 – only to see them drop back into single-digits soon afterwards.

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18 Responses to “Nortel Stock Split Reversal”

  1. Riaz Khan Says:

    Nortel Stock Split Reversal would be suicidal for Nortel. Since 90% of the companies going to RS, their share prices goes back to previous levels in one year. Agere is one of the latest example.

  2. Kevin Says:

    Why are they so concerned to bring up the stock price with a reverse split (forget the Mutual funds for now)? Mike Z., focus on the core fundamentals and the rest will take care of itself. Consider CISCO, with a mkt cap of approx. $132 bil they have 6.15 Billion shares outstanding! Mkt Cap signifies the relative worth to common shareholders…there are other ways to increase worth than simply pulling a fast one, which as Riaz pointed out would most likely fail. Lucent is in the same situation as Nortel. They have 4.47 Billion shares outstanding and they don’t come near Nortel in unrealized potential. An alternative to a reverse split and that does bring added value; buy back shares in good times. Wait. Focus on core issues, get financially strong (comparable to CISCO) and then, only then do you consider this. The shareholders who stick with you will be rewarded rightfully so. Mike, between you and me, stay the course. Nortel is on the right track with you at the helm, no need for a reverse split.

  3. Long Term Winner Says:

    Reverse split will allow more to buy since it will be above the $5 minimum for many intitutions.

    Meanwhile Mike Z will produce gains in share value in 2007 and beyond with changes he is making in operations, marketing, products etc

  4. Long Term Winner Says:

    Reverse split will allow more to buy since it will be above the $5 minimum for many intitutions.

    Meanwhile Mike Z will produce gains in share value in 2007 and beyond with changes he is making in operations, marketing, products etc

  5. Bob Says:

    A reverse stock split would effectively punish the loyal and remove the benefit of a well earned reward at the end of the road to recovery!

    While a stock price above $5 would allow the institutional investors to legally pick up Nortel stock, most investment managers’ would not be allowed to do so until the fundamentals support the price. When all the fundamentals support the price, the price will rise of it’s own accord and will be much more attractive to institutional investors. Until then, it will simply fall back to the current levels.

  6. Newbie Says:

    Any more comments on NT stock? I am thinking to buy some shares, is this the right time?

  7. Newbie Says:

    Any more comments on NT stock? I am thinking to buy some shares, is this the right time? Thanks for sharing your expert view.

  8. Apple Says:

    RevSplit?
    As I remember, Nortel has only short window open for the RevSplit. /is it Apr 2007?/
    Today Nortel is closer than ever to do RevSplit as CIENa did and JDSU did.
    With all the negatives implied they did it.
    btw
    I see JDSU is enjoying strong quarter rise in share price today – around 16% /Nov 3/

  9. Apple Says:

    Yes, as I said, NT did it!
    1:10 RevSplit

  10. Ryan Says:

    I don’t know what to make of Nortel. When I purchased stock it was not so much in the faith of the company, but rather Mike Z’s ability to turn it into something great. However this is taking longer than expected and doesn’t seem to be heading in the right direction. While good decisions are being made, effective decisions are not being made. And why is there is a reverse stock split?? Is this really necessary at this time?? I don’t think so. The company has weak financials and therefore the market will not support a $20 Nortel stock price. I fear my loyalty to the executive team will mean a loss of money for me.

  11. Chris Says:

    It took me a while to figure out why Nortel was trading up over $20 mark. I hadn’t heard about this massive reverse split. Wow 10:1 reverse is so mathematically easy to work with. That will make it easy to re-figure out how much the company has actually lost in the future when everyone forgets their shares are actually worth 10 the negative power of 1. Ouch!!!

  12. Al Says:

    This sucks, my 500 shares turn to 50 bummer. I had 10 Jan 08 call options and can’t figure out what they are worth or new symbol. I suppose my 10 options are now 1 option. How about if the USA gov does a reverse split on the value of our $100 bill? Will the $100 now turn into $10, or the $10 turn into $1.00. This sounds fuzzymath to me. I wonder if the CEO’s pay checks will do a reverse split also, HAH HAH? Lets see how that works, CEO’s salary of $100,000 goes to $10,000.00. Sounds good to the stockholders. Lets put it up to a stockholder’s vote.
    Fuzzy math.

  13. don brown Says:

    THIS SUCKS ALSO , WHEN READING OTHER COMMENTS. GREAT FOR THE COMPANY AND CEO. MY 400 SHARES ARE NOW DOWN TO 40. AND WHEN THE SHARES GO DOWN TO A MUCH LOWER PRICE WHERE DOES MY INVESTMENT STAND!!!!?/ NOT A VERY GOOD MOVE FOR SHAREHOLDERS… THE COMPANY SHOULD BE RELYING ON ITS OWN MERIT AND LET THE STOCK FIND ITS OWN LEVEL….

    FUZZY MATH MAKES CEO LOOK “”GOOD”” DON

  14. scorned investor Says:

    This looks like a lame move to make Notrel appear to be in better shape then it likely is in reality. This company needs a leader a la Lou Gerstner who can take a hard look at the fundamentals of the company and re-build it rather then making pathetic PR moves to keep the company on the stock exchange and looking “good” to mutual fund managers. Fix the company, not the stock!

  15. Guy Lepage Says:

    We have about a 1000 shares which we purchased when Nortel really tanked our . averaged out @ about $1.32
    What are our shares worth now?

  16. Bill Ritchie Says:

    After further inquiries with Mike Z and discussions with Nortel’s investors division, it appears they are NOT going to compensate any shareholder, period.
    Their policy appears to be to ignore all investors who “hung in there” hoping the “old” stock value would come back ‘some day’ forget it, it’s not happening. The reverse split of 1 for 10 put a stop to that–BIG TIME.
    If you did not participate in the two class action settlements that expired on November 20th 2006 then you qualify for this new suit.
    We need to know how many (pre Dec 1st 06)shares you hold and at what price you paid for them. If the average paid is below say, $8. then it may not be in your best interest to participate. It’s possible that the stock “might” climb to $80. some day!
    Looking forward to receiving your information–type Nortel 1 for 10 in the subject of your e-mail.
    Bill Ritchie.
    cwritchie@cogeco.ca

  17. Bill Ritchie Says:

    To answer Guy Lepage’s question:
    The value of your 1,000 shares after December 1, 2006 is: 100 times the stock value on that day. You will notice the stock value has increased ten times as much as it was on November 30th 2006. However, you only have 100 shares now. The 1 share of NT for 10 of your shares took effect on December 1st 2006. You have not lost value on your NT stock holdings-yet!
    Good luck, Bill Ritchie.
    cwritchie@cogeco.ca

  18. Bill Ritchie Says:

    Bill Ritchie Says:

    January 20th, 2007 at 10:53 pm
    After further inquiries with Mike Z and discussions with Nortel’s investors division, it appears they are NOT going to compensate any shareholder, period.
    Their policy appears to be to ignore all investors who “hung in there” hoping the “old” stock value would come back ’some day’ forget it, it’s not happening. The reverse split of 1 for 10 put a stop to that–BIG TIME.
    If you did not participate in the two class action settlements that expired on November 20th 2006 then you qualify for this new suit.
    We need to know how many (pre Dec 1st 06)shares you hold and at what price you paid for them. If the average paid is below say, $8. then it may not be in your best interest to participate. It’s possible that the stock “might” climb to $80. some day!
    Looking forward to receiving your information–type Nortel 1 for 10 in the subject of your e-mail.
    Bill RitchieThank you,
    cwritchie@cogeco.ca

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