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What's Nortel Worth?

12:00 PM -- Given the news from Nortel Networks Ltd. today, I thought it'd be worth a quick glance at what Nortel is now worth, compared to some of its peers in the telco equipment space and some other similarly valued companies. The chart needs no explanation, but I'd love to get your reactions and comments via the message boards.

Table 1: Market Cap Comparison
Company Exchange Symbol Last Price Quote Change Market Cap
ADTRAN Inc. NASDAQ ADTN $19.53 -0.84� (-4.12%) $1.24B
Ciena Corp. NASDAQ CIEN $10.24 -0.99� (-8.82%) $924.83M
Clearwire Corp. NASDAQ CLWR $9.5 -0.15� (-1.55%) $1.56B
JDS Uniphase Corp. NASDAQ JDSU $8.03 -0.86� (-9.67%) $1.76B
Neustar Inc NYSE NSR $19.7 -0.50� (-2.48%) $1.55B
Nortel Networks Corp. (USA) NYSE NT $3.01 -2.29� (-43.21%) $1.49B
Sycamore Networks Inc. NASDAQ SCMR $3.19 -0.08� (-2.45%) $905.50M
Tellabs Inc. NASDAQ TLAB $4.03 -0.19� (-4.50%) $1.60B
Source: Google Finance




— Phil Harvey, Editor, Light Reading

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paolo.franzoi 12/5/2012 | 3:31:55 PM
re: What's Nortel Worth?
1 - Compare Enterprise Values - Nortel is actually worth several times Tellabs.

2 - Have you noticed that Tellabs is worth less than it valued AFC at?

seven
DCITDave 12/5/2012 | 3:31:54 PM
re: What's Nortel Worth? 1. yeah I think enterprise value is the way to go -- and the value of the enterprise business (too different things, mind you)

2. D'oh!!! My favorite quote, probably off the record, from a Tellabs exec was: "The GPON contract was ours to lose. And lose it we did."

ph
lightroute 12/5/2012 | 3:27:35 PM
re: What's Nortel Worth? There are rumors that IBM and Huawei are looking for a grab.Any insider updates ??
ethel the frog 12/5/2012 | 3:27:33 PM
re: What's Nortel Worth? Hmmmm.............Ericsson? They bought Marconi, cut the products (even a soft switch that actually worked unlike their own one)and kept the customers. Could do a repeat job on Nortel....
chook0 12/5/2012 | 3:27:33 PM
re: What's Nortel Worth? Not and insider, but.....

It would be death for IBM to buy Nortel. Two matrix-managed companies duelling to the death internally. Additionally, there would be way too much conflict between the internal and external channel.

Huawei has too many cash problems to digest a company the size of Nortel. There just would not be the available cash to rationalise operations, and it is questionable whether Huawei could retain the customers which is where most of the value is.

Cisco isn't gonna touch it, simply because Cisco's mantra is "buy a good caompany, give them Cisco's channel and let them fly. If they don't fly, then take their technology and employees." It wouldn't fly because Cisco is rubbish in the SP sector, the quality ratio of the employees is too low, and Nortel's best technology (except for metro optical) overlaps with Cisco's too much.

Juniper could probably extract 1.5B worth of value on balance from the technology (particularly the optical and wireless and packet telephony) and the customers but it would be extremely bloody and it's not Juniper's stated strategy to grow by acquisition. Besides, they are too smart.

I can't think of any smart companies for whom it makes sense to acquire Nortel even at this price. So which dumb one wants to choke on the raw potato?

--chook
James_H_McGraw 12/5/2012 | 3:27:30 PM
re: What's Nortel Worth? Hi.

If no company is willing to buy NT, maybe a investment group? Anyone interested? I assume NT has very limited products that they can grow, but is it worth a shot????

james
brtechy 12/5/2012 | 3:27:30 PM
re: What's Nortel Worth? If Ericsson did it it would be really dumb... To try and fix a broken machine on the enterprise and data side with just a slightly better one (but nonetheless broken as well) doesn't make a lot of sense to me. Unless of course we are simply talking about Verizon as a customer and nothing else. Wireless for wireless you know the drill.

Sad to see it happen, but no great wonder is left in Nortel's portfolio, and $0.12 stock is a result of that (remember the reverse split). In the bottom of the 2001 crisis Nortel got to $.50, and many thought it was the end of the world. It wasn't, there worse times to come.

As for those who discarded Cisco as a possibility, they are right, except for mentioning that Cisco has a rubbish Carrier business (I wouldn't call a $15B business at 65% GM rubbish...). It would have made a lot of sense back in 2004, but not now. Same for Siemens, it would have made perfect sense a while ago, but Nortel's value is all but falling through the cracks right now.

My $0.02 (will NT stock get to this as well?)

jmunn 12/5/2012 | 3:27:30 PM
re: What's Nortel Worth? NT is down to $515 million! Truly a once in a lifetime bargain. Probably because it would kill most companies that bought it.

Personally, it would probably help me if Alcatel would swallow this poison pill. However, I think they learned their lesson with Lucent and are unlikely to try to choke down another poisonous frog. BTW. Is there anything left of Lucent?

It might be worth it to big A just to make NT go away.

Just my 1.5 cents. (cost reductions you know)

jmunn
jepovic 12/5/2012 | 3:27:27 PM
re: What's Nortel Worth? I guess the share price reflects the fact that NT lacks obvious buyers. It just doesn't make any sense for any of the large vendors, and the financial investors are crippled buy the crisis.

My guess is some asian player will grab NT in the end. They could do it for the customer relations and for political reasons. Normally, it would be politically impossible for US/canadian politicians to allow a sale of NT to eg China, but the alternatives are few and do include bankrupcy.

It's fascinating how LU and NT, once world telecom leaders, have practically disappeared in less than a decade. It would make a great story for a book (but not a hollywood blockbuster), if someone would try to understand how it happened.

A few thoughts:
* To blame price war from china does not make sense, as Ericsson, Nokia and Alcatel have done quite well in the same time
* The absolutely lousy if not downright evil management must take a big part of the blame.
* Personally, I would put a lot of blame on the CDMA dead end. The biggest trend in telecom the last decade is the rising dominance of wireless, at least in terms of investment. Here NT and LU put way to much effort in the CDMA market, a local standard without a future. The CDMA market was created with american political power to protect the domestic vendors, but in the end it just fooled them

Just my 5 jiao (just get used to it...)
inauniversefarfaraway 12/5/2012 | 3:27:27 PM
re: What's Nortel Worth? Jepovic,

An epic, surely it is. These folks wielded power for sure and this was the main cause of their demise. Still is. The folks in this company believe they will endure, this is the flaw in their thinking. They can't understand why they keep losing ground, that is the comical part. They still think they are Masters of the Universe.

For a Hollywood story, there are all the elements, sex, interfering spouses, spying, decadence, intrigue and death. Nortel is a social club masquerading as a technology company.

WRT China deal, this is just awful for them, there is no doubt they rank and file would rather see it (Nortel) vanish than suffer the ignominous fate of being acquired in this way.

Remember that at one point, Nortel thought it would acquire Cisco. Cisco declined affirming that it would be bigger than it.

Come Huawei of dubious origin. As we know, one of the great tragedies of the American technology story is that avoidance of antitrust laws trumps the widget builders. Companies are better off creating and nurturing competition for fear of government intervention. Again, this another way our society rewards bad behavior. We can always build better widgets and dominate, it is just so hard to find a worthy adversary. This is the failure of ingenuity everywhere since it encourages some very bad behavior and destroys innovation.

Back to Nortel, imagine the humiliation of being aquired by... a company that is the spawn of those who rejected your offer and cast you down from such lofty heights.

How the mighty have fallen.

Again, the folks in Nortel are an immovable object. This is a culture that still runs things as if they called the shots, decided who lives and who doesn't. Believe it or not, a lot of folks who suckle the great notorious lady of the evening do nothing but feed this monster. Imagine the result when faced with the tide of changing technology, this is the irresistible force.

Do you thing any human organization is wise to resist the forces of nature? Only at their peril.

They are in the process of selling the meat and throwing the bones way... What is left?
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