Here is the press release verbatim from June 15:
"Nortel Networks has also decided to discontinue its access solutions operations. These operations, which include our narrowband and broadband access solutions (as well as Nortel Networks membership interest in Arris Interactive and investment in Elastic Networks) accounted for approximately 7.7 percent and 6.9 percent of Nortel Networks revenues for the year 2000 and the first quarter of 2001, respectively. A charge of approximately US$2.6 billion (after tax) is expected to be recorded in the second quarter for the closure and disposition of the various businesses."
Then later in that same paragraph:
"Nortel Networks expects to exit, dispose of, or otherwise transition its ownership in these various businesses and investments over the next 12 months."
So what would you call words like "closure and disposition of the various businesses" and "exit, dispose of, or otherwise transition its ownership"? I say that is exactly the same as they are planning to divest their ownership share. How else could you interpret these words? Especially when they will take a $2.6 billion charge in the second quarter "for the closure and disposition of the various businesses". Closure and disposition of a business is the same as divesting your ownership interest, is it not?
Well, I suppose on a technicality you are correct that you did not see the specific words I used, but the intent is still the same. They are going to take a big charge to get rid of the various access solutions operations, including their membership interest in Arris Interactive.
My question to Arthur was the possible contention that by going through with the merger of Arris Interactive with ANTEC into the "new Arris" that by exiting the joint venture that could be construed as closing and disposing of the joint venture. Then they would just have stock in a new company, nothing more. They would not have any operations associated with the "new Arris" i.e. no sales channel to support, no engineering staff, no support obligations, etc. Just stock.
What do you think? Would that be considered closure and disposition or transition of a business to the accounting folks? I suppose for the sake of semantics this would fall under the "otherwise transition its ownership" of the business. Yeah, that's it. They would be transitioning their ownership in Arris Interactive to the new Arris. That's it!
Now that we've analyzed the words in the press release to death and know precisely what they intend to do, there should be no more uncertainty surrounding ANTEC stock! And the price should go back up - oops, too late, it already did today. Somebody else must have figured it out too! |
