Nortel has agreed to sell its UMTS unit to - surprise, surprise - Alcatel for $320-million. It was only a matter of time before Nortel sold the money-losing business, and Alcatel seemed to be the most logical buyer. While Nortel can certainly use the $320-million, it is below the expectations of analysts, who were looking for about $500-million. Nortel held a conference call today at 9 a.m. to provide an “update on advances to the execution of its business plan”. According to analysts, Nortel's UMTS access business was losing about $200-million a year on sales of $400-million to $500-million. No wonder Nortel wanted out so badly. With UMTS out of the way, Nortel CEO Mike Zafirovski can now focus on other parts of the business that don't meet his 20% market share benchmark. At the end of the day, Nortel will be a smaller player but, hopefully, profitable.
Update: For more views on Nortel, check out All Nortel, All the Time.
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Friday, September 1
by
Mark Evans
on Fri 01 Sep 2006 06:33 AM EDT
Thursday, August 3
by
Mark Evans
on Thu 03 Aug 2006 07:45 AM EDT
Nortel posted second-quarter earnings
of $366-million this morning, or 8 cents a share
(compared with analyst estimates of about 2 cents). Before investors get too excited and storm off to jump on the bandwagon again, the bottom line was nowhere as good as it appears. For one, profits were buoyed by a $510-million gain from
shareholder litigation recovery. After accounting for charges related
to restructuring and asset sales, Nortel lost about
$89-million in the quarter, or about 2 cents a share. Another sign Nortel has yet to recover is a sharp decline in gross margins to 39% from
43%. However, Nortel remains confident the rest of the year will be more
promising. CFO Peter Currie said the company exepcts strong sales momentum, high single-digit growth compared with 2005, gross margins of 40%, and operating expenses to be flat to slightly up. Thursday, June 29
by
Mark Evans
on Thu 29 Jun 2006 07:18 AM EDT
My column in today's National Post looks at Nortel's need to spill the beans on where it's headed strategically. CEO Mike Zafirovski has been working away for more than seven months on his corporate makeover, and now analysts and investors want in on his master plan. By the way, Nortel's annual meeting is today.Update: Here's my story in Friday's National Post on the AGM. It includes some interesting details about some new stock options granted to Mike Z. at a lower strike plan than the ones he received last year when he was hired. Tuesday, June 27
by
Mark Evans
on Tue 27 Jun 2006 08:55 AM EDT
Surprise, surprise (well, not really), Nortel is cutting 1,100 jobs and reviewing its pension plan. The jobs cuts will reduce annual operating expenses by $100-million in 2007 and $175-million in 2008. The company also unveiled changes to its pension plan from defined benefits to defined contributions contributions to defined benefits, which will save Nortel about $100-million a year. And everyone wondered why Nortel CEO Mike Zafirovski is so bullish about the company's prospects.
Tuesday, June 20
by
Mark Evans
on Tue 20 Jun 2006 10:47 AM EDT
For another long drink about Nortel in the wake of the Siemens-Nokia joint venture, check out my story in today's National Post. |
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