Nortel is one of the largest telecommunications companies in
the world with representative operations in 150 countries. The main
thrust of its philosophy today is bringing “state of the art” high
technology communications solutions to users in every possible
situation. Nortel started life in 1895 in Ontario in Canada and has
been involved in innovation in the field of telecommunications ever
since. Nortel made the first field telephone to be used during World
War One in Flanders (now part of Belgium) and the first dialing
equipment - used on a PBX in a Canadian Brewery.
That was long before the “A” went into the abbreviation to make the
Private Branch Exchange Automatic. Millions of businesses around the
world, Fortune 500 companies and government institutions work with
Nortel equipment and systems - the company has an excellent reputation
in the areas of reliability and security. Systems are tailored to
specific needs, whether they be for the transmission of voice or data,
and with the customers’ own vital parameters as the primary design
starting point. A list of Nortel customers reads like a Who’s Who of
business all over the world. In fact, it’s Nortel who provide the
telecommunications network for the New York Stock Exchange, along with
some eighty of the country’s top hundred banks and the Department of
Defense.
Nortel stock has generally been a “safe” buy. Certainly over the last
several years, stability has been a keynote. From the first quarter of
1983 through the end of 1998, the share price climbed steadily then,
after a brief dip, it climbed aggressively to reach a high just off
that magic hundred dollar mark ahead of the crash of 2001. Currently,
Nortel stock is trading within a fairly narrow band, between $2.50 and
$2.70. but whereas sentiment has been bullish, it’s expected to swing
towards bearish this week. The stock’s home market of Toronto is
anticipating a quiet period and, whilst the stock hasn’t been reacting
to anything specific, there’s an anticipation of resistance to C$3.45
($2.81). That was, in fact, the price at which the stock peaked in New
York, on 15th July - the only previous occasion it tested that level
was during the first week in June when it briefly touched $2.90.
Nortel last year had total revenues of $9.8 billion and showed a loss
on that of $111 million. However, the company always has and continues
to invest huge sums in Research and development. At the same time,
projects that companies like this get involved in, do not come to
fruition in short time-scales - it’s not like WalMart selling you a TV
set and you’re paying them for it before they’ve paid their supplier -
cash-flow is always going to be negative contributor to a major
communications operator like Nortel. Without specific details of work
in progress, it’s obviously difficult to make precise predictions about
future revenue or profitability but it’s unlikely in the extreme that
there’s anything that need deter a potential investor.
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