Morgan Stanley Analyst Down on Nortel

Morgan Stanely's Scott Coleman, who has been among the more bearish analysts on Nortel, has reduced his 2006 and 2007 EPS estimates after being disappointed by the company's gross margin guidance. "Weaker than expected guidance, particularly for gross margin and operating expenditure, reinforces our thesis that the turnaround story at Nortel will take a while to play out," he said in a research report, adding the 2006 guidance was 200 basis points below his expectations. Coleman is also concerned about that Nortel's guidance for operating expenses is flat to up operating expenses, and the challenging profit and margin outlook for GSM.

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