Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



A Tech Titan in the Chop Shop

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

I thought that I heard you laughing
I thought that I heard you sing
I think I thought I saw you try

But that was just a dream
That was just a dream

-- From "Losing My Religion" by R.E.M.

Just as we predicted when Nortel Networks (NYSE:  NT  ) filed for bankruptcy protection, the telecom equipment maker is getting more than a mere makeover. The competition is chopping it into pieces, each walking away with the bits that make sense for them. It's the end of Nortel as we know it. How do you feel?

The herd of hungry would-be buyers, according to The Wall Street Journal, is led by telecom infrastructure operation Nokia Siemens Networks, which is run jointly by (surprise!) Finnish telecom Brobdingnagian Nokia (NYSE: NOK  ) and German technology giant Siemens AG (NYSE: SI  ) . If these deals work out, it'll give Siemens and Nokia a strong presence -- which they currently lack -- in the North American market. The Europeans are coming!

Nokia Siemens prefers (again, surprise!) Nortel's wireless products and services. Separately, Siemens Enterprise Communications is bidding for Nortel's business telecom assets. Bidders for these and other parts of Nortel's carcass include Genband, a nonpublic business in which Alcatel Lucent (NYSE: ALU  ) owns a significant stake, and privately held Avaya.

The leaders in data and voice communications equipment don't seem to care for Nortel's leftovers, though. Cisco Systems (Nasdaq: CSCO  ) is not interested, and LM Ericsson's (Nasdaq: ERIC  ) name didn't come up, either.

Unfortunately, it looks like Nortel investors will be left holding the bag. Company spokesman Jay Barta says that Nortel wants to "provide maximum benefit to our key stakeholders, including our creditors, customers and employees." Notice that "shareholders" is not part of that list.

Nortel's liabilities outweigh the assets by about $4 billion. Keep in mind that Nortel sports a market cap of roughly $100 million now -- less than one-thousandth of its glory-day peaks above the $200 billion mark.

Do you see any combination of chop-shop sales adding up to that large a premium? I sure don't. But the stock popped some 20% on this news, in spite of these major issues that spell "no value" to me in large, red letters. If you’re in the unenviable position of holding leftover shares, sell them today while you have the chance to benefit from this irrational spike.

Further Foolishness:

Nokia is a Motley Fool Inside Value selection. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.

Read/Post Comments (1) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 14, 2009, at 7:38 AM, ozzie wrote:

    Nortel, frankly, deserves a slow and painful demise. For many years, I kept investing in this tech powerhouse, with the promise, by GE Genius Mike Zavirosky and many before him, that Nortel's salad days were just around the corner. I wish for all those who prevaricated such nonsense a small portion of the pain they caused me (about 10% of my portfolio) over the years, multiplied times the number of investors for whom they caused the pain.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 871189, ~/Articles/ArticleHandler.aspx, 10/21/2016 10:31:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 hour ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

1/13/2009 4:03 PM
NT.DL $0.32 Down +0.00 +0.00%
Nortel Networks Co… CAPS Rating: **
ALU.DL $0.00 Down +0.00 +0.00%
Alcatel-Lucent CAPS Rating: ****
CSCO $30.15 Down -0.01 -0.03%
Cisco Systems CAPS Rating: ****
ERIC $5.10 Down -0.27 -5.03%
Telefonaktiebolage… CAPS Rating: *
NOK $4.92 Down -0.08 -1.60%
Nokia CAPS Rating: **
SIEGY $115.76 Down -0.19 -0.16%
Siemens AG (ADR) CAPS Rating: ****