With Nortel Networks
Of course, this comes as no surprise. If the telecom equipment maker gets caught up in a big accounting scandal, its stock is sunk. That fear has sent the stock to $5.25 from $8.50 in the past month.
But here's a thought. If the accounting problems turn out to be minor, the stock's value could get a big lift. Nortel's preliminary reconstituted financial statements will be unveiled April 29. That's when we'll start to get a better sense of the financial discrepancies. On the same day, Nortel also releases its first-quarter results. So, we'll also learn more about Nortel's ongoing business, which appears be going pretty well.
The telecom business environment is slowly getting better. The worst is probably behind Nortel and others like Lucent
Having aggressively invested in research and development throughout the industry's severe downturn, Nortel now has a big technology lead in the wireless and Internet arenas. Investors should remember that from a business perspective, Nortel is arguably the best positioned for gains in the industry. Casting its accounting problems to the side, Nortel ought to command a premium.
Don't get me wrong, I'm not recommending that anyone go out and buy Nortel. It's not a good investment while the stock is still fraught with the uncertainty associated with financial and regulatory risks. But there is always a chance that Nortel will get through them unscathed. If it does, today's sellers will probably kick themselves.
Fool contributor Ben McClure hails from the Great White North. He doesn't own any shares mentioned here.