Archive for the ‘Uncategorized’ Category

Nortel Opens Facility in Turkey

April 5, 2007

 

Nortel’s move to lower costs by opening facilities in lower-cost geographies took another step forward with the opening of a a new “Centre of Excellence” in Istanbul, Turkey. The facility, which was part of an announcement that year that also included a move into Mexico, will provide support for customers around the world, network technical support for North American customers, and network integration and technical support for customers in Europe, the Middle East and Africa.

Nortel CEO Mike Zafirovski said the facility is “an important milestone in the Nortel story. This center is vital to improving customer support as we enter a new era of communications driven by the convergence of three powerful megatrends we believe are significantly changing the industry – hyperconnectivity, communications-enabled applications and true broadband.”

Translation: If Nortel wants to lower operating costs, increase gross margins and boost profits, the company needs to leverage lower-cost places such as Turkey, Mexico and China. As Canada’s flagship high-tech stories, a big question is how many more jobs will be moved out of Canada and the U.S., especially high-paying R&D positions.

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VoIP: As Easy as 1, 2, 3

January 31, 2007

Just when you thought Nortel was about to hitch its strategic wagon to IP-TV (video), they fire up the VoIP marketing machine. The company has introduced new VoIP packages under its – are you ready for it? – IPT 1-2-3 program. The idea is companies that haven’t used VoIP can now get them in a snap from Nortel, including unified communications. Nortel highlights Bally Technologies as a customer that has embraced Nortel’s A-B-C, 1, 2, 3 approach:
“We had a telecommunications decision to make,” said Matthew Alden, IT manager, Bally Technologies. “Do we continue business as usual or upgrade 20 global facilities to VoIP by replacing with a Nortel solution or another competitor’s solution? After working closely with Nortel we realized that the Nortel migration path from TDM to VoIP and the long-term vision to unified communications was the right business decision. Also, the Nortel solution was much less disruptive to our day-to-day global business activities and was much less expensive than the competitor’s path. Since our migration, the addition of three new U.S. and International offices has proven to be a very simple process.”

Wow, where do I sign up?!

Is Nortel Good Value?

January 30, 2007

In a submission to Seeking Alpha, Contrarian Investor’s Mark Schlotzhauer uses Nortel as an example of how investor needs to focus on value rather than following the crowd. To assess whether Nortel is good value, Schlotzhauer uses GuruFocus.com as a benchmark (it’s a site that tracks the investment portfolios of super-rich people such as Warren Buffett). Of this elite crowd, only two (Charles Brandes and George Soros) own Nortel. Schlotzhauer concludes that he is “staying clear of Nortel as we feel it does not have an adequate margin of safety and no economic moat ( i.e. sustainable competitive advantage)”.

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CitiGroup Upgrades Nortel

January 26, 2007

CitiGroup analyst Michael Genovese has jumped on the Nortel bandwagon by upgrading the stock to “buy” from “hold” while setting a target price of $35 from $25.

“There is an attractive restructuring and valuation story,” he wrote in a 23-page report. “Nortel plans to reduce about $1.5 billion in costs by the end of 2008. We expect EPS to turn positive in 2007 and grow about 140% in 2008 to $1.75, and with consensus at $1.52, we do not think the Street is giving Nortel the proper credit for the restructure. Nortel has a strong new management team in place and is increasingly focused on a few areas of potential growth including carrier VoIP/IMS, Optical, Ethernet, EV-DO, WiMax, and Enterprise voice and data.”
Genovese raised his 2007 earnings estimate to 72 cents a share from 35 cents, compared with the consensus estimate of 65 cents. “We believe Nortel’s restructuring is underappreciated by the Street and consensus estimates are too low,” he said. “As [gross margins] and earnings improve, we expect the valuation to move towards our target of 20 times 2008 EPS, or $35 per share. We expect revenue growth rate acceleration and continued margin expansion beyond 2008.”

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Nortel Looking for IP-TV Acquisitions

January 25, 2007

Minerva
LightReading must have some pretty good sources within Nortel these days. After writing about a speculated asset swap between Alcatel and Nortel last week, LIghtReading is reporting today that Nortel is planning several IP-TV acquisitions as part of an aggressive strategic focus on the telecom video market. “Nortel has revisited its IPTV strategy”, a source told LightReading, adding that Minerva Networks Inc. is the most likely first move for the giant vendor. In March, Nortel and Minerva signed an agreement to jointly develop an application interface that enables the integration of real-time IPTV services with Minerva’s iTVManager software.

Alcatel-Lucent Merger on Watch

November 20, 2006

Light Reading reports that Alcatel and Lucent have agreed to have their merger (well, it’s actually Alcatel buying Lucent) open for further review by the Committee on Foreign Investment in the United States after deal is completed as part of a security agreement reached with a variety of U.S. government agencies. The "merger" is expected to be completed Nov. 30. Tags: ,

Analysts Getting Frustrated

November 10, 2006

A theme among analysts in the wake of Nortel’s third-quarter results is frustration/impatience with the pace of change of the company’s restructuring. Earlier this week, TD Securities cited this issue as a key factor in a decision to reduce its rating to "hold" from "buy" and its target price from $3 to $2.50. CIBC World Marketing analysts Ittai Kidron jumps on the bandwagon by describing Nortel as a "turtle in a rabbit race". He believes the company should keep its Metro Ethernet and VoIP units but sell everything else "while they have value". Source: Globe & Mail. Tags: , ,

Nortel Recognized by Hall of Fame

September 13, 2006

Did you know Canada has a Telecom Hall of Fame? Did you know they have special recognition awards? Well, Nortel is getting an award for “its role in pioneering digital communications” – an initiative that was launched in 1976 under the “Digital World” program. Of course, Nortel’s real push from analog to digital happened under the reign of ex-CEO John Roth, who walked away from Nortel in 2001 with a cash booty of more than $135-million (mostly due to stock options).

NT-Microsoft Deal Dissected

August 13, 2006

Sci-Tech has a lengthy story looking at the recent Nortel-Microsoft with some insight from customers and analysts.

Analysts Down on NT

August 7, 2006

UBS has maintainted its “neutral” rating on Nortel but reduced its target price to $2.35 from $2.55. In a research note published last week, UBS said it is concerned about the absence of visibility of the revenue contribution from the NT-LG JV and large deferred revenue balance. Meanwhile, Prudential analyst Inder Singh has downgraded Nortel to “neutral weight” from “overweight”, while slashing his target price to $2.50 from $4.

Nortel-Motorola: A No-Go?

July 15, 2006

Chicago Business has a story looking at Motorola CEO Ed Zander’s strategic options, which include everything from making an acquisition to expanding the company’s hot cell phone business (Razr, Rokr, etc.). With nearly $15-billion of cash, Zander is not hamstrung financially but his track record suggests he’s not a big fan of mega-deals. Chicago Business opines that Nortel seems an unlikely target for Motorola because it is still recovery from an accounting scandal and its CEO is Mike Zafirovski who missed out on becoming Motorola’s CEO to Zander.

“Still, Nortel’s name keeps coming up because, unlike Motorola, it has a strong portfolio of third-generation (3G) wireless equipment — the technology most in demand by U.S. wireless operators.” – Chicago Magazine.

Record Traffic!

June 20, 2006

Nothing like big news to drive traffic. The Siemens-Nokia joint venture announcement saw more than 1,300 visitors yesterday. Now if Techmeme.com would only discover All Nortel, All the Time, life would be really good.

Outlook for Nortel-LG Joint Venture

June 17, 2006

Nortel held a conference call earlier this week to talk about its joint venture with LG, in which Nortel acquired a 50.1% stake for $145-million. The JV was created to give Nortel access to the South Korean market; to sell JV products from Nortel; and leverage the R&D resources of the two companies.  According to Desjardins Securities analyst Paul Howbold, the JV has generated $500M to $600M of revenue – most of which will be back-end loaded in 2006 due to some GAAP JV accounting issues. Howbold is concerned, however, that revenue may fall in 2007 as major UMTS contracts wind down. He rates Nortel a "hold – above-average risk" with a target price of US$2.50.

All Nortel, All the Time Blog Feed

April 20, 2006

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Nortel’s Low CeBit Profile

March 12, 2006

Nortel – along with Cisco – does not have a booth at the massive CeBit trade show in Hannover, Germany. Instead, it has a booth with joint venture partner,LG Electronics Inc. Apparently, Nortel is taking a look at how it approaches “live brand communications” (a.k.a. conferences, seminars, etc.) With Nortel about to launch itself into a cost-cutting overhaul, you have to wonder whether the CeBit decision isn’t the start of a the New Nortel.