Prudential: Nortel Restructuring Falls Short

In a stinging criticism, Prudential Securities believes the pace of the company’s restructuring program is not happening quickly enough to achieve its market share and cost savings goals. In addition to poking holes at Nortel’s recent strategic partnership with Microsoft and its prospects in the WCDMA market, Prudential turns its sites to CEO Mike Zafirovski’s goal to have at least 20% market share in each business.

“We believe industry consolidation makes it more difficult for Nortel to achieve its targeted 20% share in its key markets. We have long advocated that Nortel should seek a merger partner, or else find itself left behind in the movement to gain efficiencies of scale”

Prudential has dropped its sales and profit estimates for 2006 and 2007 to $11.1 billion (up 6% YOY) and one cent, and $11.7 billion (up 5% YOU) and eight cents, respectively. It’s target price is $2.50. The stock closed yesterday at $2.01.

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