Nortel (NT)

[Fredledingue]

Wow,
This is the stock I real got all wrong about.

...Trading under USD $10...

The big loss is explained by the $1.06 Bln Tax charge (otherwise they would break even). But the bad news is that revenues fell 4%, margin is lower and their task force will be cut by another 8%.


This stock seems to have no bottom...

[Fredledingue]

Rectification (I read the news very fast and wrote the message abve even faster ), it's not a "tax charge", it's a "defered tax assets" write off, which is completely different.
This means that in the future they will be elligible to tax compensation for 3 billions instead of 4, hence the write off and the one billion "charge".

It's not like the company lost that money or did something bad. A change in tax policy in Canada caused that issue and there was very little NT management could do about that.
It's basicaly a non-cash non-event with no material meaning.

Certainly, news such as lower revenues are not encouraging, but the market priced that in a long time ago, when the share dropped from USD $20 to $11.
And does not justify another 30% drop to $8.

I'm ready to buy more share, but I'm looking how low it will go. Because this stock has a trend to visit abyssmal seabeds.

[Fredledingue]

I bought more NT shares today at USD $6.85.
I'm not saying this is the bottom (I would not be surprised to see it fall till $5). But at some point you have to decide for action when the price looks good.

NT fell so much not only from bad news, but also from a salvoe of torpedoes by the press, helped by the general meltdown on stock markets.
One analyst wrote "Nortel lost 880 billions last quarter. They also wrotte off 1.03 billions of deffered tax assets" as it was two separate events, one bad news compounding to the other bad news. Why don't he simply write "Nortel lost 880 billions because they wrotte off 1.03 billions of deffered tax assets" which is closer to the reality?
The reality is that their revenues are growing. The only bad news is that revenues are gowing slowly. Slowlier than expected, yet still growing, save one or two secors which were flat.

So even if it falls lower, I'm confident that NT, at these price can double up in one year, and tripple in two.
My target is now $20 from $30. Despite analysts reducing thier target to $12.
The main reason is that without this non-cash, non-business, non-management, non-event write off, the company was profitable.
When I told that on Y! forum, they made fun of me. Let's see who will laugh last!

[Fredledingue]

NT results have again disapointing, but the share price grew slightly off its low.
Sign that it was oversold. Poeple expected another huge loss, they had only a moderate loss. The disapointement is that they still made a loss.

But ok, times have been difficult for everyone lately.
I'm still confident with my high price target expectations.