Why is Mike Z. So Optimistic?

Nortel CEO Mike Zafirovski told analysts yesterday the company will post "some of the best results in Nortel’s history" by 2008. So what does he see that investors don’t given Nortel shares touched their lowest level yesterday since late-2002? How can he be so bullish at a time of fierce competition and lower margins within the telecom equipment market, as well as Nortel’s disappointing first-quarter results? Some of Mike Z.’s optimism about profits and operating margins may have to do with the dividends of fixing Nortel, which is undergoing a massive strategic, cultural and operational overhaul under his leadership. You get the impression the ex-Motorola COO believes there is a lot of low-hanging fruit to be picked before any of the really tough questions (such as whether to sell low-performing units or merge Nortel with Nokia or Siemens) have to be answered. For investors, do you buy into Mike Z.’s bullishness and pick up a few Nortel shares, or wait on the sidelines given the company’s recent over-promise and under-deliver history?

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One Response to “Why is Mike Z. So Optimistic?”

  1. Jon Lenton Says:

    If Mike Z was not bullish on the company we would all wonder why he is leading it, so it should be natural for him to believe in the success (future).

    What should concern us is the rosy forecast for 2008 as no one knows where the global economy will truly be and where the best regional hot spots will be excpet that many are banking on China. China however has a history of making everything it’s own way so any venture in this area cannot be counted on until proven out.

    How technology will change? A false step and Nortel will have to buy another company or sell the rest of that product line.

    The most distressing is the lack of conifdence that Nortel has finished the accounting struggles, it seems impossible to comprehend that people cannot account correctly. These contracts with large companies must be more than an MOU, aren’t there dates with delivery and compensation in real contracts? When Mike Z can comment on this situation and generate confidence then invesotrs “may” wade back in. Any people investing now are tentative “let’s put in a little” in case it goes up.

    Lastly, when will they figure out the reseller organization, what commitments do vendors with multiple vendor product lines really do for Nortel. This has been a problem for years and one which is rarely mentioned.

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