With little fanfare, Nortel shares have started to gain some momentum over the past month. The stock closed yesterday at $31.62, a 16% climb in the past month. It’s not like analysts have been falling over themselves pushing the stock, although people such as RBC’s Mark Sue are getting a bit more positive.
- Comment
- Reblog
-
Subscribe
Subscribed
Already have a WordPress.com account? Log in now.
All Nortel, All the Time 
February 17, 2007 at 1:43 pm |
A rise after a reverse split which tanks 75% of the stocks, let alone with Nortel’s struggles, makes absolutely no sense aside from perhaps untying institutional bagholder’s hands to average down /catch the falling knife.
We clearly see what their business and outlook is in this dire trend headed to zero without a miracle. Last large order was BSNL and the PEC acquisition didn’t do so well let alone any other. Their woes are endless as they exhaust assets to point of selling the business and scramble to gamble in failing ventures ill affording more. Cisco has IPTV, others lead in WiMax, wireless is tanking and accounts for half their business, their largest margin business accounting for 80 to 90% of their gross profit is set to tank in 2008.
Cisco has and makes lots of money trading at 27.52 while Nortel trades $31.63 losing money since 1997. This is a joke, what a laughing stock.
This company has a 3 buck book value, and printed billions in Nortel paper at a multiple of its declining cash just to survive another day after settling one of the world’s largest fraud lawsuits. Fines, debt, criminal results, dilution, etc., loom amidst their proverbial yet traditionally contradicted optimism.
So who is rallying the stock this time and why, when dispassionate analyst commentary isn’t even forthcoming disclosing their insolvency risk in this consolidating sector should their last kick at the can not materialize again. The PR craze in a turnaround story as CEO hypes/ CTO blogs may prove yet just that, another crazy story. Is the green team fighting another 52 week low in 2007 with what works best, selling stories and assets as they cut product and credibility?
Nortel always did trade at a premium and always did disappoint. If you see the previous spikes in the graph, they were due to what Nortel said only to be later corrected. Is this time any different as we witness their ethics officer, CFO, and auditors walk? They always did pair the bad news with incorrect good news.
I often wonder if their institutional finance contacts who issued bonds (later stipulated pension deficits be listed in future bond applications) have anything to do with the rise in value. Last rally was due to Q205’s profit that proved overstating post fraud settlement resulting in creditors increasing collateralization 50% to $1.5B they had to print high risk 10.5% bonds to pay, that only further dampening negative cash flow as they sell assets to maintain unreliable numbers and look like a player.
They chronically overstating unreliable numbers they extended repairing, list largest asset a tax credit to beef numbers they seek to clean, and hope to repair controls requiring $300M in SAP software by 2008 when 1.8B debt is due I question how they will finance this time.
Every reason to tank and no reason to rally. This stock never ceases to surprise with so much more to come. An utterly puzzling rally yet again indeed. Their woes are endless amidst so much dispassionate commentary and a nightmare track record and trend with no improving outlook but traditional misleading hype. Aggressive targets and proverbial cuts in this linear death spiral are no reasons for retail speculation lacking any miracles so who is buying it this time, yet again?
February 18, 2007 at 6:45 pm |
Citigroup, the company which issued part of the bond issuance from last year in order to help Nortel’s cash flow out, also upgraded the stock the day after Peter Currie resigned. Since then the stock has taken off like a rocket. It appears be a case of the bondholder manipulating the stock in order to get its money back for its institutional clients and itself. Follow the money trail.