All About Nortel - Latest Comments in Guest Post: Duncan Stewart

Re: Guest Post: Duncan Stewart

heidimarie — Thu, 29 Oct 2009 06:31:26 -0000

I am researching the history of the Duncan Stewart & Co in so far as its interests in Cuban sugar refinery, in specific Camaguey (1880-1920) and also in specific to Duncan (1846-1904) and his sister Christina (1841) Stewart born of Peter (1804-1864)and Elisabeth (1811) Stewart. I am wondering if you are related to that branch of the family. There is a John Stewart (b. abt. 1836 Kincardine) born of Peter’s second wife, Janet (1814) while she was married to Peter’s brother. I am trying to discover more about him. I believe he was a close friend of my great grandmother, Emily Blackwell (1854-1937), who, it has been demonstrated or suggested, lived at one time or another in Dorchester, NB; Moncton, NB; Montreal, QC; Roanoke, VA; Lynn, MA; Savannah, GA; La Gloria, Camaguey, Cuba; and Fort Wayne, IN.

Thank you for your time in reading this. I hope you can help me.

Kind regards,
Heidi-Marie Blackwell

Lauzun, France
heidi-marie@blackwellstudios.com

Re: Guest Post: Duncan Stewart

yes4aapl — Thu, 04 Jun 2009 01:09:50 -0000

Plus NT has a fair chunk of deferred revenue flowing through the income statement. Those 'revenues' are real...but they cash for them was received some time ago. In other words, as these deferred revenues drop off the QUALITY (from a cash generating perspective) of NT's revenues will increase.
=======
re
In 2008 Nortel_CFO recognized around $1.3 Bill in deferred revenues. Some of them /how much?/ were placed into def. rev section during restatements of 2000-2003
In those restatements Nortel placed $3.5Bill into deferred revenues.
Question is
Where is missing $2.5 bill or more in deferred revenues?
Did deferred revenue recognition misled public_analysts about real business in 2008?
In other words
If 2008 were as good as Mike Z tried to paint it why Nortel is in BK now? Class action law suit is real.
Parliament wants to know about bonuses in 2008 and I guess in 2009.
What was the Word?
Summon
Summon

Re: Guest Post: Duncan Stewart

Lonely Ops Guy — Wed, 12 Nov 2008 18:19:54 -0000

Mr. Real
"when you give someone a good idea for free, it's never good enough."
I agree 100%. I too, have sent numerous suggestions via "channels" that would supposedly reach the higher echelons. Never heard back anything.
What a shame.........

Re: Guest Post: Duncan Stewart

Lonely Ops Guy — Wed, 12 Nov 2008 18:14:53 -0000

Mr. Real:
That's an excellent start. Drop the Carrier business, drop 20K staff and focus on Enterprise business where, if NT acts quickly, it might stand a small chance.

Re: Guest Post: Duncan Stewart

Lonely Ops Guy — Wed, 12 Nov 2008 18:04:08 -0000

Proto:
When Joel “The Womanizer” Hackney got on board, during his very first Vegas Sales Conference, this was the first thing he brought up in that stage. That he was going to simplify supply chain and reduce the 60K PEC codes to something around 20K in the next year or two. This was back in 2005. I have to confess that I believed him for a while. I should have noticed that something was wrong when he start pursuing the 48 hours metrics. From there, it was downhill……..
What a shame……

Re: Guest Post: Duncan Stewart

exnt2 — Tue, 11 Nov 2008 20:09:44 -0000

you forgot a major expnse - your salary. 40% GM goes to pay R&D, SG&A each at roughly 20% of sales and other expenses. cash flow negative buddy. cash flow negative. find out one statement in the past 5 years where they were cash flow positive. maybe the one where Z got his little bonus.

Revenue has already fallen to below 10 billion and will continue in steep decline. are you one of those who estimate 3% YoY CDMA decline when it is 30%. ooops. ouch hurts does it not.

With capital expenses now at a minimum, MEN sales delayed due to long sale process and CDMA going down faster than a rock, no major LTE deployment for a couple of years, I'd say a really optimistic forecast is 9 billion. more likely 7-8 billion. if the economy is as bad or worse than it is, this could even tank to 6-7 billion. the middle line, interest, taxes etc. still remain the same.

some of nortels largest customers are gone. morgan stanley, bear stearns, lehman. thats a lot of accounts receivable that will get written off. there are more bankruptcies coming and unless there is a way to get payment, there definitely will be a lot more bad debt.

It clearly looks like Pavi is cleaning house with two back to back quarters of heavy losses. So the writing is pretty much on the wall.

Disagree with Duncan. Usually Q3 and Q4 are strongest quarters for Nortel. Q3 really tanked big time. Q4 will be as good or worse around $2 or 2.3 billion.

Re: Guest Post: Duncan Stewart

The Psychiatrist — Tue, 11 Nov 2008 17:58:35 -0000

Duncan

I don't agree with your valuation of Nortel's business units

you assume value of the ES unit at about $2B(Avaya-like multiple) but Avaya was actually taken private at about 1.7 x sales or $8.2 B.Nortel's ES revenue is about $2.5B,if we applied an Avaya multiple- Nortel's ES would fetch just over $4B double your figure.Furthermore with MEN being a growing division at least longer term,then it deserves a multiple of at least 1 x sales or about $1.5 .You also said that Nortel's customers would start defecting at an increased pace-if you look at their book to bill for MEN it came in at 1.08 which indicates strong growth,in other words even with the announced intention of wanting to sell MEN,their book to bill would indicate anything but defection.

Nortel's CDMA business,although a dying one is worth more to Nortel than what they could get selling it,after all any interesested buyers could use the -well this is a business on the decline argument to pay next to nothing for it-an good analogy for this would be my older car that I have where I just spent $3k on it and its listed value is not more than $2800,but since I kept this car in good shape from the very beginning I know that the $3k I spent on it will serve me better by driving it to the end than trying to get that back with a sale of the car.

Finally there is the issue with Nortel's deferred tax assets which stood at $6.8B as of Sept 30/08,I believe that with the right buyer some of these deferred tax assets could be of good use and represent value if propperly applied.

The cash burn for me is still an unknown for many obvious reasons and with the latest restructuring,this should help alleviate some of this concern to the tune of $400 million according to Nortel.

You seem to have used a bare bones calculation on valuation and I can't blame you after all you have a sell side point of view,but I beg to differ and feel that if Nortel could manage through this period reasonably well,then I think they could get better value for their units when the credit markets ease up.

Re: Guest Post: Duncan Stewart

duncan — Tue, 11 Nov 2008 17:39:44 -0000

Most analysts are thinking around $800 million cash burn. I am a bit more pessimistic and think it could be closer to $1B...but I have some unusually negative views on the global economy, CDMA and telecom spending.

One reason where exnt2 might be going wrong is annualizing the Q3 numbers. From a CASH perspective they got hit with a couple of things that a (for a change) truly unusual. Plus Q3 is historically a weak quarter in terms of cash cycle, Plus NT has a fair chunk of deferred revenue flowing through the income statement. Those 'revenues' are real...but they cash for them was received some time ago. In other words, as these deferred revenues drop off the QUALITY (from a cash generating perspective) of NT's revenues will increase.

Does that help?

Re: Guest Post: Duncan Stewart

duncan — Tue, 11 Nov 2008 17:26:27 -0000

There is, after all, a long and noble history of UBC Engineers doing things to old Volkswagens!

http://www.cbc.ca/canada/story/2001/02/05/bridg...

Re: Guest Post: Duncan Stewart

ian stewart — Tue, 11 Nov 2008 16:19:51 -0000

Actually, getting the old VW was an attempt to provide Duncan with some cheap transportation to UBC. But it turned out that the whole underside of the car was rotted out, so we switched to taking it apart so he could learn how a car works, as he was thinking of becoming an engineer.The sale of the parts idea came along last, and might be one reason he is in the securities game.

Re: Guest Post: Duncan Stewart

Tongue.In.Cheek — Tue, 11 Nov 2008 16:18:29 -0000

You're blowing smoke. Let's look at any deal and how cash works from the deal. Nortel earns revenue and receives cash from the customer. There is Cost Of Goods Sold, which is the expense cost of raw materials etc. to build the product. That cost is part of Accounts Payable and paid from the proceeds of the deal. Revenue - COGS = Gross Margin. We know that Nortel gets about 40% Gross Margin across their deals.

Now what to do with that 40% Gross Margin that comes in as cash. They pay debt interest as there is no meaningful debt payment due until July, 2011. On Deferred Taxes, I'm not sure exactly how that works, nor do I fully understand the tax burden on a company reporting a loss. That was part of the Tax Credit writedown yesterday right.

Your assumptions essentially draw the conclusion that Nortel will not gain much revenue and essentially zero Gross Margin for your forecast to be true. It is pretty clear to see that would be a clearly false statement.

Re: Guest Post: Duncan Stewart

exnt2 — Tue, 11 Nov 2008 15:36:55 -0000

300 mill a quarter which is 1.2 billion + debt payments + deferred taxes + accounts payable etc. read the income statement and cash flow staements before you start posting.

even if you go to 800 million like you said they are still out of cash.

I dont have a grudge as you incorrectly point out. Just portraying whats likely to happen.

also to add there are pension woes too if chapter 11 does happen. it could result in claims getting 15 cents per dollar.

Re: Guest Post: Duncan Stewart

Tongue.In.Cheek — Tue, 11 Nov 2008 15:19:05 -0000

How in the world do you come up with a Cash Burn value of $2.3 Billion in 2009? Most analysts are suggesting around $800 Million. How do you get to a number approx. 300% greater than the worst case analyst projections?

Duncan ... if you are reading this, can you offer any reasonable explanation on how Nortel could burn $2.3 Billion in cash in 12 months? Seems to me to be a very far fetched assumption from an ex-Nortel employee with a grudge.

Re: Guest Post: Duncan Stewart

exnt2 — Tue, 11 Nov 2008 14:58:43 -0000

here is an article on what I am talking about.

http://skloverworkingwisdom.com/blog/index.php/...

Re: Guest Post: Duncan Stewart

exnt2 — Tue, 11 Nov 2008 14:46:01 -0000

under bankruptcy protection creditors cannot come after Nortels assets, cash, inventory etc. So if it does file bankruptcy and lays off people, they become very much like creditors. They cannot be paid. The absolute minimum legal obligation is 1 week for every year if some cash was allocated.

If not paid, laid off employees can go to court but since the company is under protection, they cannot get nothing. This is also unsecured like shareholders meaning last to get paid out if anything is left from asset liquidation if it happens.

It makes sense to take cash now. But the company cannot afford to hand out a lot of money upfront. 1300 jobs is 300 million. 5000 is 900 million. Tough situation looking at cash.

$2.3 billion
- 300 million restructuring
------------------------------------
2 billion
- 2.3 cash burn 2009
------------------------------------
- 300 million
- 1.2 billion pension adjust etc
------------------------------------
- 1.5 billion 2010

With debt coming up in 2011, zero liquidity, no positive cash flow (from profit), you can very quickly see this going to chapter 11.

The $10 billion revenue will dry up 2009 as customers move away from risk. Its bound to happen. Even optical the golden goose would be killed off until it gets sold.

Re: Guest Post: Duncan Stewart

Nortel watcher — Tue, 11 Nov 2008 11:37:11 -0000

exnt2,

I wonder if you could answer the following: In the event of a bankruptcy filing followed by layoffs, would NT be obligated to follow precedent and pay severance? If not, then those on the payroll today may see a benefit indeed with being layed off today vs. some time in the future.

Re: Guest Post: Duncan Stewart

duncan — Tue, 11 Nov 2008 11:16:41 -0000

No -- there are lots of Canadian tech companies that trade on the TSX only and not the NYSE. The $1 limit is New York only.

In fact, given NT's market cap, a NYSE listing is probably an unnecessary expense.

Re: Guest Post: Duncan Stewart

NewAge — Tue, 11 Nov 2008 10:28:57 -0000

NSN faces "critical time" also.. There will be cut offs...

Nokia Siemens To Cut 1,820 Jobs In Finland, Germany.

http://www.informationweek.com/news/management/...

Re: Guest Post: Duncan Stewart

fx — Tue, 11 Nov 2008 10:23:17 -0000

these things are not announced until they are fully baked... still in back burner

Re: Guest Post: Duncan Stewart

selloff — Tue, 11 Nov 2008 09:23:41 -0000

nt to open at 0.90. if this dips and gets kicked off the exchange, do the shares become useless?

Re: Guest Post: Duncan Stewart

laidoff — Tue, 11 Nov 2008 09:13:14 -0000

they have to pay unless it is a performance issue that is well documented. since there is no documentation, they usually pay it out. HR does not even have performance records so there is no history.

they can transfer employees sold to another company. the other company has to keep the service with nortel if they layoff. or a new employment agreement that guarantees employment for some time.

a lot of these are also deferred to keep cash flow. so if the company goes bankrupt, these are unsecured and you to back to the line of all creditors.

Re: Guest Post: Duncan Stewart

NewAge — Tue, 11 Nov 2008 08:40:12 -0000

Do you have any web link regarding to this news? Or is it just an internal announcement?

Re: Guest Post: Duncan Stewart

fx — Tue, 11 Nov 2008 08:35:24 -0000

NO, it is a real fact. Second presentation to NSN

Re: Guest Post: Duncan Stewart

exnt2 — Tue, 11 Nov 2008 08:30:37 -0000

like I said, this means that there is no cash to pay people severances now. they have to wait for the MEN fire sale to get some cash to borrow money from Peter to pay Paul.

Nortel employees I bet are a bit relieved that its 1300 not 5000 or 10000 as expected. They will get comfortable only for a major upheavel later. That is reality.

Hanging onto 1 billion for operating cash is scary. I'd say bankruptcy is around the corner, coming soon to a Nortel location near you.

Re: Guest Post: Duncan Stewart

NewAge — Tue, 11 Nov 2008 07:53:33 -0000

Is this also a speculation?