Hey, the PEC Deal Actually Made Sense!

 

Somewhere, ex-Nortel CEO Bill Owens must be smiling after Nortel was among 25 companies selected to be part of a multi-billion dollar contract to provide services to the U.S. Department of Homeland Security, which is launching a seven-year program called the Enterprise Acquisition Gateway and Leading Edge Solutions to enhance the department’s information technology services. Owens, a ex-U.S. Navy Admiral with all kinds of connections in Washington, was the one who pushed Nortel to get into the U.S. government technology services business by acquiring PEC Solutions for $443-million in cash. It was a strange move because PEC was a second-tier systems integrator focused on one vertical, albeit a large one.

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2 Responses to “Hey, the PEC Deal Actually Made Sense!”

  1. skeptical Says:

    They paid a premium to acquire PEC, a deal the analysts hated. They also wasted billions in acquisitions in the bubble days, with a historically poor track record in earnings.

    The market is still waiting for “Show me the money” and any press release about Nortel draws out the Nortel-holics thinking this disgraced icon will rise from the ashes to its former glory at a multiple of its size.

    If we remove the last of their 2 billion revenues from 2005, they are worst that 2004’s $9.8 billion (worst sales since mid 1990’s)

    paying a premium for so little revnue makes little sense, especially when earnings have been decling since 2000 for PEC too.

    This recent traditional hype is shared by 25 companies. BT took everyone but them, a relief to see PEC isn’t as taboo albeit I am not sure the name change associating it with anything to do with this disgraced icon is such a good idea.

    How much will Nortel get in this deal, more importantly earn. If it were anything substantial, they would eb the first to hype up a storm in light of their Chapleau Legion think tanks or tribes in mall orders =)

    They have a habit of selling assets or take on money losing deals like BSNL, to beef revenues, let alone most recently claim profits solely by a declining share value.

    This rivals the nortel-holic media hype of joining the OJ Simpson of anti-trust to help them sell their server software:
    http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B9D898B31%2DA37F%2D4D7E%2DA2DF%2DA83C8A201AB7%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

    Media is as quick to jump on hype like triple profits Q205 that had to be restated, a Neptune that never came any more than Putian or any plan, cutting R&D, repairing internal controls, etc… How can we keep believing their ongoing hype as anything good in light of their ongoings.

    I still say show me the money, so far they are tanking faster and printing a multiple in paper than their rapidly declining cash just to keep afoat and I don’t think this PEC or Nortel Government Solutions, changing slogans, or numbers, are helping their eventual outcome any. They remain on borrowed time as anything they touch sours… lets see what the next fre quarters bring in this trend to see if they even have the 3 to 5 years they want to keep paying themselves lotteries while keeping fraud bonuses even after rendless revsisions, as the stock just tanks and tanks on the way to insolvency. Just do the math and never mind the traditional hype.

  2. Dhanraj Amlapure Says:

    In retrospect it was a very good deal – it opened the doors to the US goverment sector through Bill Owens contacts

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