Friday November 12, 5:55 pm Eastern Time
Canada Nortel shares weaken and drag BCE lower
TORONTO, Nov 12 (Reuters) - Shares in Nortel Networks Corp. (Toronto:NT.TO - news) (NYSE:NT - news), one of the world's leading communications gear makers, slumped on Friday following the euphoria earlier this week and took major stakeholder BCE Inc. (Toronto:BCE.TO - news) down as well.
Analysts said that some people may have mistakenly walked away from Nortel's investor conference on Wednesday with conflicting expectations of fiscal 2000 growth in a key area. Other observers credited profit-taking following the stock's run-up on Wednesday and Thursday.
On the Toronto Stock Exchange, Nortel shares fell C$4.60 to C$104.25 on volume of more than 2.3 million shares by mid-afternoon. On New York's market, they slid 3-1/8 to 71 on volume of 5.4 million shares, signaling that U.S. investors were more active on Friday.
Telecommunications conglomerate BCE, which owns about 40 percent of Nortel's stock, dipped C$1.70 to C$95.75 in turnover of about 1.4 million shares.
Bob Hastings, Vancouver-based analyst at Goepel McDermid, said that BCE trailed lower in the wake of Nortel's losses.
Paul Sagawa, an analyst who covers Nortel for Sanford Bernstein in New York, said some people at Nortel's get-together had erroneously taken away an impression that growth in the optical networks area -- which helps push data, sound and pictures down glass fiber strands -- was to grow in fiscal 2000 faster than the original forecast of roughly 50-60 percent.
Sagawa, usually a Nortel booster, said the company's executives did not answer some questions as clearly as he would have liked.
The ``giddiness' following the meeting was replaced by somber second thought as some people sought and received clarification, Sagawa said.
Sagawa liked the stock for the long term but said its price is very high right now. ``The valuation is in dangerous territory,' he said, adding he was ``growing quite concerned about market expectations.'
Another analyst, who attended the Wednesday conference along with Sagawa, said that Nortel's fall on Friday was mostly the result of investors seeking quick profits by selling some holdings.
However, the analyst added that Nortel had been sending ``ambiguous messages' on the growth of its booming optical line in the last few months. ``Clearly the optical business is good and getting better,' he said, adding that it was simply a question of degree. |
