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Technology Stocks : Nortel Networks (NT)
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To: KYA27 who wrote (2407)4/11/1999 12:42:00 PM
From: Stock Farmer  Read Replies (1) of 14638
 
Presuming you actually do want answers and aren't intending to make
some obtuse comment (or demonstrate shallow judgement), you could
look in the annual report or the filings on SEDAR.

Nortel reported a loss in FY '98 as a consequence of charges taken
in conjunction with the purchase of Bay. They also took a charge of
447 M$ against restructuring, offset against a one time gain of 441
M$. Factoring these "one time" charges out, one gets a picture of
the stable element of the co.

PE is just one of the measures useful in comparing companies.

However, it is a good idea to dig beneath the factors contributing
to "E" and apply some judgement before investing in (or slandering)
a company.

This isn't just accounting fiction, or more precisely, it is
accounting fiction that needs to be pieced together carefully.

For example, inclusive of all one time gains and charges, NT posted
a $M 64 EBIT and yet $M (601) provision for taxes and $M 32 Dividends
on preferred shares - resulting in annual earnings of $M (569).

Another way of looking at this is that the governments also view the
intangibles as irrelevant when computing taxes (and they aren't
generous about excluding things that reduce taxes).

Finally, the numbers to answer your question.

Earnings applicable to common shares (569)

Add back:
Aquisition related amortization
Purchased in-process R&D 1,241
Acquired technology 228
Bay Networks Goodwill 161
Subtract One Time Gains (441)
Add One Time Charges 447
Net Tax Impact (2)

Suppl. Meas. of Net Earnings 1,065
EPS (Supp) 1.86 vs 1.54 (FY'97)
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