Is Nortel Going Broke????

[james t kirk]

Here's a question for the peanut gallery.

Is Nortel going broke?

I say this because I was told today by a close friend who owned almost 20,000 shares that they sold everything on advice from their brokers.

I was shocked.

To me, i figured selling at these low levels is crazy, but my friend was told that Nortel is going broke, not might be going broke.

I own a few hundred shares bought over time, and currently standing much in the red. I figured I would wait it out like any other cycle since it is investment money.

My friend took an incredible bath on their recent sale, and they do not do rash things without serious consideration and consultation. We are talking a million dollar bath here.

I thought, impossible, Nortel, aka Northern Telecom has been in business for a long time, and there is no way the gov't would not try and help them out the way the US gov't did with Chrysler.

But now I just don't know.

I am curious to know if anyone else has any information.

Nortel seems to be hovering around the 4 dollar mark these days, not much more.

I would have thought it would have been moving up a bit lately but no.

And before i get a call from someone at nortel threatening to sue me, let it be known, i want nortel to go to $200.00 a share. I am now way slandering, or bashing Nortel.

Just all of a sudden, I am very concerned, not just for my little speculation which i still hold, but the bazillions of people who own this company.

Please, someone tell me it will get better.

 

[clipper]

Nortel

I really doubt Nortel will be allowed to fold. Most brokerages have it as a long-term hold.

They are growing the top line, lots of new long-term contracts in China and elsewhere.

The company hasn't made any money since 1998, but the banks lined up to float them more loans anyway.

The recovery on this one is still at least a year away. I prefer to take a cyclical approach to the market. My gold shares have more than doubled in the last little while.

Your friends may simply have seen more opportunity in other investments.

I just don't see much benefit to holding Nortel at the moment.
It's not as if it's going to rocket to even $10 overnight.

In short, why take the risk when the upside is so far away. Put your coin in something that has earnings. You can always come back to NT after you've made some money in the oil, gold or gas stocks.

The hardest lesson for investors to learn is to take a bunch of small losses rather than being "frozen in the headlights" and getting run over by one bad investment.
I know. Iv'e learned the hard way.

 

[Paul Waters]

Nortel is a buy at anything under $4.00.

Look for it to reach $10.00 in a year. That is a great return.

But not good news for all that bought it at much higher prices.

 

[Malibook]

The hardest lesson for investors to learn is to take a bunch of small losses rather than being "frozen in the headlights" and getting run over by one bad investment. clipper

This is so true.
This is a short term trader's market, long and short, and stop losses are prudent.
Many investors will never sell a stock at a loss.
They assume it will come back one day.
Many investors average down several times and still need a miracle to get back to even.
'It is not a loss if I do not sell' is what many take some comfort in.
The loss is finalized when you sell but to deny it's current existence is illogical.
NT has gone from $124 to $4 CDN in about 18 months.
NT is on an unsustainable trend with no turnaround in sight.
NT would do extremely well if they can stop the bleeding sometime soon.
I think the banks have good reason to worry about NT paying off it's debts but they will likely refinance.
It is tough to write off Billions of dollars but it may get to the point where the creditors may decide to cut their losses and recover whatever they can.
Investors who are down a high percentage of their investment may feel they don't have much to lose, but they should look at the current reality of the stock.
If the stock is not a strong buy now, why hold onto it?
Just becasue NT has gone from $124 to $4 does not necessarily mean it is cheap?
Share price alone is useless in determining the valuation of a stock.
I don't see NT disappearing but it is conceivable that NT could go bankrupt and reorganize.

 

[Ping]

I was under the impression if they begin to slip too far and get gobbled up by someone else, its not as though you loose everything. Sure, youre stocks go with them, so you may not hit a jackpot; but youll still do ok from a takeover. Gold on the other hand is ultra volitile, similar to investing in the Asian market(realllly bad idea). If your not prepared to watch it 24/7 stay clear, if your educated and a risk taker, roll the dice

 

[KBear]

Nortel, looking at the trend, and it does not look good. There are 1000's of stocks out there, and im sure that some could be found with a better price trend then Nortel.

www.bigcharts.com is one charting site you buyers my want to check before taking the plunge.

 

[johnny]

i have a friend who bought in at around the $70 range, about $3500 worth, his broker called last week and suggested to sell. the value now is about $175. i couldnt see the point in selling, hes already lost over $3000, so what if they go broke and he loses another $175? he is going to keep them and hope they go up. the problem is oversaturation. someone on here mentioned that nortel will not be allowed to fold and wont go bankrupt. a couple years ago if someone said nortel would be selling for under $4 no one would beleive it. nortel was supposed to be the type of stock you bought and looked at it 10 years down the road. Nortel can go bankrupt if they do not recieve financing and continue to lose money, everyone one thinks nortel is a great deal now at $4, but these people also thought it was a great deal at anything under $10. my advice, nortel stocks are going down and the business is in trouble, why not look for a company whos stock is going up and the future looks bright.
i also knew people who thought bre x was a good deal at $3. the reason is, people remember when the stock was $200 and hope it can one day get back to that level. im not an expert but my guess is to stay away from nortel, every time it goes lower, people say its at a bargain price, but it just keeps dropping.

 

[Hepcat]

"I thought, impossible, Nortel, aka Northern Telecom has been in business for a long time, and there is no way the gov't would not try and help them out...." - James T Kirk

Keep in mind that bailing out the company is not the same thing as bailing out the shareholders. There's no need for the government (or anyone else for that matter) to bail out the shareholders.

Why would you buy Nortel here? It's not cheap on the basis of any of the traditional measurements e.g. P/E - infinite, Dividend Yield - 0%, Market/Book, Price/Sales. It's not even cheap relative to the lows at which it's traded in the last fifteen years.

Nortel's current level of sales is under US$12 billion and still falling as bandwidth providers (Nortel's customers) such as 360 Networks, Global Crossings, Teleglobe keep failing and holding fire sales of their assets. The amount of fibreoptic cable in the ground that's currently in use is only about 3%! So how is Nortel going to increase sales to its present breakeven of US$15 billion? I think the company will have to refinance at $0.25 per share within the next year. Otherwise they'll be C&D within eighteen months.

"I really doubt Nortel will be allowed to fold." - Clipper

It's not a case of being "allowed". If the company cannot pay its debts, it must either secure new financing (@ $0.25 per share?) or close its doors.

" Most brokerages have it as a long-term hold." - Clipper

Long-Term Hold means Sell in broker speak!

"I understand the real value should be around $40...." - Ping

The "real value" may have been $40, but that was before the company pissed away billions and billions of $! All that is ancient history now. The present reality is very different!

 

[Hepcat]

This thread started with Nortel at $4.00. It's now $2.50!

 

[The Bandit]

It closed at $2.22 today. Why not take a gamble at this price, 100 shares would only cost you $222. I'm sure most of us have spent that at an MP or SC. A minimum risk....

 

[wollensak]

Nortel decline - new shares being issued

Nortel has fallen hard because the company is going to sell up to 500 million new shares at a price that hasn't yet been announced. There are already 3.2 billion shares outstanding, so this is a dilution of about 16%. In order to get people to buy this junk, they are probably going to have to offer warrants or convertible debentures, convertible into yet more shares.

I repeat - leave it alone. You could have made 100% on Kinross
and not had to dance with this turkey.

The question now is not whetether it will ever again hit even $10, but whether the company can raise the new money it needs to survive.

IF they can sell the new shares at a price above market (how?) the shares MAY go up. If you like shooting craps this ones for you.
NBC for me (never buy crap).

 

[fflowley]

NT

The fact that they are doing a massive secondary with a share price below $2 indicates there are tremendous problems. There is simply no chance this thing will price ABOVE market.....that simply never happens, and you can be doubly sure it wont happen in this case.

I would look at NT shares a scall options with no expiration date at this point. Use speculative dollars only.

 

[MRMARCUS]

This stock is done and the powers that be are keeping it alive because so many people have money invested in it. I think everyone knows someone that has alot of shares of Nortel.
This stock has become a farce and needs to be investigated seriously. The ex CEO supposedly has anywhere between 125 million cdn or 300 million cdn in his piggy bank.

 

[danibbler]

From the looks of it...

sounds like everyone is suggesting get out or don't throw good money after bad!

I would have to second that. I work with people in the field and it's doom and gloom. Earliest possibility of a telecom recovery is "maybe" 2003 or 2004.

The odds of NT going up to even $10.00 is pretty low. Think of this in percentage terms and not simply dollars.

 

[Malibook]

Nortel still has a few billion in cash but they know this will not be enough.
After constantly pushing out the date for being profitable, NT has finally admitted it is in deep shit.
That is why they have executed a massive 1/3 dilution at a buck and change to raise more money.
NT has paid a heavy price to buy some time.
NT probably has enough money to make it through 2003.
The problem for NT is that they are still on an unsustainable trend with no turnaround in sight.
NT could be good for a quick trade but for most longs who have lost the vast majority of their money there is very little hope.
It is never a bad idea to bank profits, always use a stop loss, only risk money you can afford to lose, and never risk borrowed money.
For many investors these are expensive lessons.

 

[StuGatz]

I don't know if Nortel is going broke, but I do know I'm going broke because of Nortel. BreX and Nortel in 3 years, I would suggest staying away from and of my stock tips!

 

[slaconte1978]

will they make it ?

 

[fuji]

I try and stay away from individual stocks and by broad market indexes. I'm down on those too obviously but I figure that SOMETHING will go back up; the index will go back up even if it's differnet companies that rise from the ashes.

The one exception is I have been buying financial stocks, specifically banks. I am betting that when the financial crisis is over they rocket back faster than anything else.

I didn't own any before the financial crisis but I have been loading up--I have taken a loss as they've kept falling while I buy them, but I will buy them all the way through the bottom and out the other side.

To hedge all this the other thing I've done is taken out a rather large PUT position on my own industry and I've quadrupled my money on that. I hope I lose my money on that actually because that would mean my career/job are secure. On the other hand if it quadruples again, well.. I guess I'll need the cash!

 

[papasmerf]

Nortel is likely to go belly up.

 

[TheShadow]

WOW!
This thread was 6 yrs. old!
What is Nortel listed at now?