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How is that for construtive direction Mr. D?
Great job Mike Z!
And I thinkg your assumption that "code is frozen" is flawed, assuming that entire teams will be let go overnight and then picked up by a completely new team. Z commented that this restructuring would happen across 2008 and 2009.
The problem for me is “which” markets. Optical is too small. Services will always be advantaged by the maker of the solution being serviced. Carrier will be dominated by Ericsson, ALU, NSN from the top, and Huawei from the bottom. Enterprise communications is shifting to software, which Microsoft will dominate. And the data networking side of Enterprise is Cisco’s business.
The only other option is to merge or be acquired. They don’t have the capital to buy anything of consequence. They would be a good target to buy and break up in some fashion. They’re cheap cheap at the moment. (And every time I say that, they always seem to get a little cheaper later on.)
Way to go Mike Z. I don't know which is less impressive - you and your cabinet or your chairman and your board. None of you know what to do.
Z's bible is Good to Great. He should write a book on Good to Nothing. Testimonials from his good for nothing cabinet will make it a sell.
africa and middle east have gone to resource hungry china. india, china and most of asia is the mining field of Huawei, ZTE, Fujitsu, Alcatel, Ericcsson and bit Cisco. Rest is fragemented across NEC, 3Com, Hitachi, Juniper etc.
Result is huge loss, penny stock. If this is pivotal and progress, what is the future
http://biz.yahoo.com/ap/080227/nortel_mover.htm...
"Unfortunately, the prior management team at Nortel left the company with a very damaged balance sheet," he added. "And with limited resources and little currency to afford a major strategic rethink, the company may have to resort to a year of basic blocking and tackling."
This is what politicians say when they feel the heat. So all the hard talk 2 years ago was nothing but mouthing off that could fill a hot air balloon. Mr. Z, which past regime Owens, Dunn, Roth, Monty, Stern. So if thats the case how about you return the $30 million. This was laid out plain and simple in the books, analyst reports - or you just came on board like a jet set exec not knowing anything about this business.
It was not Mike Z. that said those things - those were the words of RBC's Mark Sue. In fairness, Blame Game may not be intentionally misleading us. There is a correction posted at the bottom of the article which says: (This version CORRECTS attribution in fifth graf. Should be Sue instead of Zafirovski.)
Moreover, if the one-off tax charge has not been wrote down, the bottom-line would reflect more or less the market consensus. i guess the analysts misguided or missed to take into account the tax charge, cause the operating profit came very close to the expectations.
don't panic guys.
Nortel needs to issue more paper. That will boost the company's stock price, and save 2100 jobs. Ya, get real.
But hey we've got this 6Sigma thing figured out and have great Ethics, so that has to account for something. Let our customers know that we have a great process to figure out our products are terrible, and we'll be completely honest about it, THAT is what will move us forward.
http://www.bloomberg.com/apps/news?pid=20601087...
" Nortel, based in Toronto, wrote down the value of its Canadian deferred tax assets, benefits used to lower future taxes, partly to reflect the drop in Canada's corporate tax rate in 2007 and the rise in value last year of the Canadian dollar, according to a fact sheet sent by spokesman Mohammed Nakhooda.
Profit, excluding the $1.04 billion tax adjustment and other items, was 30 cents a share, missing the average estimate of 44 cents on sales of $3.28 billion in a Bloomberg survey of analysts. "
“I do believe as 2006 winds down, this will show a nice improvement over 2005,” Zafirovski said Monday during a speech to the Canadian Club in Montreal.
Zafirovski admitted Nortel was “in the form of a perfect storm during the last four or five years, and we do see a place where the stars are aligning for Nortel to come back very strong”.
The Nortel CEO said he was counting on a number of the technological trends like “hyperconnectivity” to help play to the strengths of the company.
October 24, 2006 at 8:00 AM EST
Can any of the critics here suggest anything in the way of a realistic strategy?
Dear commentator 'Watcher',
i think Mark Sue must answer this question (deferred tax asset issue). Or, may be the blog owner raise this issue in the front page and we somehow get the answer from the people responsible
What about adding to your list:
- adjusting Nortel staff salaries downward to within industry average
It is common knowledge that Nortel pays employees above the industry average still today.
Also, are you aware of the quote from an analyst at Charter Equity Research: “Growth is very slow for everybody, including Nortel, and it's not going to get any better any time soon"?
As for a takeover, in the unlikely event this happened, I don't think the approach would be 'using what is good and liquidating what is bad'. The approach would probably be to relocate (i.e. sack) *all* the employees, adopt a very small portion of the plethora of products in the Nortel portfolio, and consign the rest to history. I don't believe this would be in the best interest of the industry, let alone the company.
would you guys say the same thing if there were no write-off but a 30 cent earnings per share?
OK, NT have "written off" $1bn of deferred tax assets because of governance rules, etc. It's not cash out, we all got this part. But the fact that they had to be written off now, does it automatically imply that these tax credits were "incorporated" in past company balances?
if you look at the 2007-end figures, the ownership equity came in as US$2,7 bn vs the third quarter 2007 figure of US$2,9 bn.
now, you can see that this loss did not affect to the company's shareholders equity, but the it reduced liability side. if it was a real loss, the shareholder equity must have been depressed around US$1 bn.
Nortel has a shareholder equity of around US$3 bn and market cap of US$4 bn.
it means that investors are paying only US$1 bn for the company's future income stream.
does it worth it or not, you decide it?
if you think that Nortel is going to make money in the future hold on to the stock,
if you think that the company will loose more money (reminding that the company made profit out of its operations in 2007) and its equity will melt down, than sell the stock.
regards,
-So I guess they're deciding to fess up. After a few years of smoke and mirrors they're finally passing the blame and forking out excuses...wonderful
Here are a few things where Mike Z should take responsibilitiy:
- not selling UMTS business sooner. Alcatel offered to buy it before, but he hung onto it and then got more losses and less cash.
- bringing in a bunch of expensive sycophants as senior execs
- not shutting down or selling off unprofitable businesses
- concentrating on operations and 6 sigma instead of strategy
- not merging with more powerful competitors when there were opportunities
1. get rid of Zaf
So, if the 'weak balance sheet' is the problem, why no mention of it the last 2 years? It's waaay too late to blame this mess on the previous management team. Whatever happens now sticks to MZ. The previous manaement team didn't load up a cabinet with arrogant GE-disciples who don't know squat about the telecom industry. MZ did that all by himself.