Nortel (NT)

[Fredledingue]

I added up today to an already old position in Nortel.
A good example of betting against the market...

1. I think the stock went down enough during this whole month of August. But "telecoms don't sell subprime mortgages".
2. I believe the telecom network build up is far from over especialy outside North America and Nortel is increasingly active abroad. Video on Demand is only starting up.
3. They still have a big debt but they also have big cash. Debt minus cash is about one billion.
4. They could be aquiring Tellab (read article).
5. An insider bought shares for one million dollars above current prices.
6. They made a big loss last quarter but this was partly due to one time items Previous quarter they made profit. Even if modest ones, they could turn profitable again soon as they revenues increase.

The risk is of course the market has not finished sliding and that some unpredictable bad news emerge but that's just obvious for every stock around here.

[Fredledingue]

No news on the Tellab deal anymore. The stock slipped to $15.50 and now is back above $17 thanks to the announcement of the new CFO appointment.

NT should see improvements in the year 2008 with or without Tellab.
At least lower interrest rates should reduce their interrest expenses.

I hope so because...
It's realy a company that forgot to tell good news for quiete a while...

[Fredledingue]

Nortel returns to profit!

Yoopi Yoopie! Ole! Ole!

NT stocks lost part of their last day gains, but the company has turned the page and is now using black ink. If it still use red ink, it will for a short time.

[Fredledingue]

NT down to all times lows! It's another buying oportunity because nothing has changed for Nortel since I opened this thread.
If I'v been wrong it's only because the market has been down and NT followed the trend.

[Fredledingue]

Bought more into NT today at $11.60

I didn't expect the sharp intraday market downturn due to oil...
Never mind: my target is $20 ~ 25 in one or two years.

[Fredledingue]

So, I lost 10% in 3 days on this one...
I realy though it was rebounding to $20, looking at the charts a few days ago.
My bad.

Yet, I think it's the most oversold stock I know of.
Their mkt cap is now under $5 billions (compare that to Google which cap is 32x bigger for revenues barely 50% higher)

[Novice Investing]

Fredledingue:

You don't and shouldn't compare market cap of Nortel with Google at all. Nortel which is debt laden non-market leader in the telecommunication business cannot be compared with Google which is cash rich market leader in the growing advertising industry.

Google has $ 14 Billion in positive net cash. That is net cash, which is done after subtracting its long term debt. Nortel has around $ 0 in positive net cash. While there are some companies spotting negative net cash, Nortel has not been consistently profitable. (It lost $ 2.57 Billion in 2005)

Having said that, I feel that GOOG is a bit overvalued while NT needs to fall down a bit more to fit my buying preference.

[Fredledingue]

The GOOG/NT comparision is interresting especialy because it doesn't match, and because of the extreme difference.
GOOG indeed an excellent company with loads of cash and NT, a laggar with huge debt.
But is NT worht only a 1/32th of GOOG?
This is strange to think about that when you consider for example that NT uses twice as many employes as GOOG.
Here are other numbers to crunch
NT
Market Cap (intraday)5: 4.79B
Enterprise Value (25-Feb-08)3: 6.06B
Trailing P/E (ttm, intraday): N/A
Forward P/E (fye 31-Dec-08) 1: 9.23
PEG Ratio (5 yr expected): 3.14
Price/Sales (ttm): 0.43
Price/Book (mrq): 1.65
Enterprise Value/Revenue (ttm)3: 0.55
GOOG
Market Cap (intraday)5: 152.87B
Enterprise Value (25-Feb-08)3: 144.92B
Trailing P/E (ttm, intraday): 36.87
Forward P/E (fye 31-Dec-09) 1: N/A
PEG Ratio (5 yr expected): N/A
Price/Sales (ttm): 9.59
Price/Book (mrq): 7.00
Enterprise Value/Revenue (ttm)3: 8.73

Now, whether to buy/sell/keep NT is basicaly a matter of feeling. I agree with that.