Summary
Nortel's situation is not easy. Actually, it is not easy since the bubble exploded in late 2000. The decision to sell the Metro business will shave more revenue growth generators and it must fulfill the gap with fresh products. The share decline is not just due to performance and market mood- it's more like a punishment and a big question mark- Are you still in the game?
Analysis
No doubt, Nortel was a giant until 2000 in telecom and wireless infrastructure and products. Since the bubble exploded, Nortel has paid a painful price in company size, areas of activities and what most interested shareholders- stock price. A telecom company whose market value is so low compared to its annual sales has to ask itself why? The answer lies in the passing eight years where shareholders and analysts got disappointed time after time. Cutting Canadian workforce, discontinuing activities, selling plants and delivering poor performance on top of lawsuits do not encourage investors to put their money in.
All these factors and many more have contributed to a negative image of this once used to be a telecom trendsetter and a dominant employer in the Ottawa region.
CEO's task is very tough and unless he shows two consecutive profitable quarterly results- he will see his share goes to the $1-$2 range, adding more frustration to its loyal shareholders, or what left from them.
