Motley Fool Picks Apart Results

After sifting through Nortel’s balance sheet, Motley Fool has put together a story called “Nortel’s Sleight of Hand: Fool By Numbers”, which suggests everything on the good ship Nortel may be worse than appearances suggest. One thing that did stand out as strange ast week was Nortel’s inclusion of a $510-million gain from a lawsuit-related transaction to make it look initially like it posted a $366-million profit.

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2 Responses to “Motley Fool Picks Apart Results”

  1. ExNortelDontLookBack Says:

    Wow, Nortel financials not all they are cracked up to be. There is a big surprise.

    Who would think that you can’t base a company on legacy DMS service contracts and repurposed ATM switches.

    This place has been circling the toilet bowl since 2001 – die already, will you?

  2. jack_bauers_evil_twin Says:

    Mark,

    Why would it “…s tand out as strange ast [sic] week was Nortel’s inclusion of a $510-million gain from a lawsuit-related transaction to make it look initially like it posted a $366-million profit.” when, in the April 22, 2006 press release announcing the Q4, 2005 results, NT reported a huge net loss that included the $2,474M charge to the litigation reserve?

    In addition, most of the articles I recall reading after Nortel reported mentioned that the reason for the profit was the “Mark to Market” credit of $510M, and that without this credit, Nortel would have reported a loss.

    One more thing about the Motley Fool’s “discovery”:

    On June 30, 2006, I wrote on the Yahoo! message board that Nortel would take a $509M Mark to Market credit in the Q2 results, and showed the calculations:

    http://messages.finance.yahoo.com/Technology/Communications_Equipment/threadview?m=tm&bn=12906&tid=813710&mid=813710&tof=-1&off=1

    That NT took this credit in Q2 was hardly a surprise to the readers of the Yahoo message board.

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