Business Insight Zone

Slightly over a year ago, I opined that “given [CEO Mike] Zafirovski’s long record of operational success, I’d say Nortel’s prospects are looking better and better.” That was in this post:

Has Nortel turned the corner?

A year later, the answer is a resounding “NO.” Last week Nortel reported a large third-quarter loss and announced that it would lay off 1,300 people. This is nothing new for the Canadian telecom equipment maker, which has all but trademarked the adjective “beleaguered” during this decade. From 2000 to 2007 the company lost a cumulative $37 billion on revenues of $111 billion — that is, it lost one dollar for every three it took in. Oh, it also shed 61,950 workers during that period.

By “contrast,” in the first three quarters of this year, Nortel has lost $3.66 billion on revenues of $7.7 billion. Yeesh.

For the morbidly curious: since the day I suggested that Zafirovski might be turning Nortel around, the company’s shares are down 97% — compared to 49% for the Nasdaq, 45% for the S&P 500, and 40% for the Dow Jones Industrial Average (chart).

What’s next for Nortel? Possibly being carved up for parts, as these two articles suggest:

• Network World: Where does Nortel go from here?
• Globe and Mail: Time for Nortel investors to face some hard truths

Sometimes, you’re better served to admit that victory will not be snatched from the jaws of defeat.

Category: Telecom