SM - not directed solely at you, I just happen to agree with what you say most of the time lately (with the exception of the Q being weak) and needed to post this to someone.
FYI (all):
Analysts reassess Nortel ratings after buy
TORONTO, June 16 (Reuters) - Analysts scrambled to adjust their ratings, both up and down, on Northern Telecom Ltd. (NTL - news) on Tuesday as they digested its $9.1
billion acquisition of Bay Networks Inc. (BAY - news), announced on Monday.
The telecommunications equipment maker, based near Toronto, acquired the Santa Clara, California, data communications firm with the aim of creating products that can
handle both voice and data messages.
Kearns Capital analyst Mark Lucey cut Nortel's rating to ''reduce'' from ''long term hold'' on Tuesday, despite the stock's two-day tumble of C$15.10.
Nortel shares slipped 1.50 to 78 on Tuesday on the Toronto Stock Exchange and 0.88 to 53.13 in New York.
His 12-month price target was $50 on the New York market, a little below Tuesday's price range.
''Even with yesterday's punishment here and even today's punishment here we think that ... there's enough uncertainties,'' Lucey said. ''We feel there's some undue
expectations being built up by the company that we have no idea how they're going to be met.''
Nortel Chief Executive and President John Roth has envisioned a company that can take on rival Cisco Systems Inc. (CSCO - news) in the arena of equipment that caters to
the burgeoning use of the Internet.
''There just aren't enough opportunities out there for them to get the resources that they're looking for in order to become more of a data networking/telecom equipment
company, the new category of company they're defining,'' Lucey said. ''I just think they paid too high a price for it.''
After crunching the numbers, Lucey also noted it would be difficult for the deal to be slightly accretive to Nortel in 1999, as the company predicts. He calculated it could take
a lot longer for the new wholly owned subsidiary to generate a higher income or create revenue synergies.
''It's also a disruptive, distracting acquisition and there's a lot of work to be done,'' Lucey added. Roth will hand over the presidency of the combined company to Bay
Networks Chief Executive Dave House.
Brokerage PaineWebber in New York upgraded Nortel on Tuesday to ''buy'' from ''attractive'' but few details were available.
($1 equals $1.47 Canadian) |
