My friends, I am a Nortel fan, and yes, I have a positive view on this company. I know many of you must believe that I am crazy, but my brothers and sisters, please listen, the time for Nortel to shine will come again. I am not claiming that they will come over one hundred dollars like during the tech bubble. But a price near fifty, and even sixty by the end of 2008 is very achievable.
For 2007 many great things will happen to this company. Much of the accounting fears, lack of management focus, and loss of market shares have been recovered. I had great hopes in Zafirovski, and he hasn't let me down. Financials have been cleaner than ever, the SEC investigations are looking positive, and even the long-awaited lawsuits are looking to a close settlement. The hint that was given to us by the company was the reverse-split that happened a few weeks back. Remember, the target savings is at $1.5 billion, and so much of Nortel's earnings will be coming from cost savings.
2008 should be the clear signal of how the company is doing. Most of the benefits outlined by management should start to be apparent by next year. For 2007 though, I strongly believe that Nortel will be involved in acquisitions to grow its business. Given that cost management has been the primary concern, it is difficult to grow R&D and business segments. Even still, management is working on expanding business, such as the $2 billion deal with Verizon Wireless, a dominant player in the wireless space. With senior executives from Motorola and General Electric, the company is in great hands. I am proud on my price target of thirty dollars or more within a year. I get this figure from 30x their 2008 EPS of $1.
My friends, I am not a Nortel employee and the name Nortel came from their previous name Northern Telecommunications, in case any of you were wondering.