Ah, Nortel
It's not enough that you've got to slug it out with the likes of Lucent
Yes, Nortel announced on Friday a trifling $2.4 billion loss and, to get to the glimmer of hope, a 10% revenue increase over last year.
Revenue ... revenue ... why does that ring a bell? Oh, yeah, because that's the reason Nortel has to restate earnings yet again. Seems it prematurely booked revenues -- in the past, mind you -- meaning that it will have to restate results spanning some of 2005, back into 2003, and even earlier. The pre-2003 restatements are expected to drop revenues by nearly half a billion bucks and send earnings down by some $99 million. (Of course, there were no earnings then. The ink at the bottom line was distinctly red.)
In one of those famous management attempts at sleight-of-hand, Nortel also issued a press release devoted to nifty business jargon -- I mean, a plan for "Short-Term Priorities to Build Shareholder Value." This included something called "Revenue Stimulation" (I'm gonna let that one slide) as well as "Integrity Renewal," Six Sigma Somethingorother, and other assorted choices and catchy programs.
Whatever. This is a company with dwindling revenues that's lost money hand-over-fist for years, though thankfully at a bit slower pace over the past couple. But how great will growth be? My bet? Not so great. Not only is competition stiff, but the demand is also ... well, in an idea I stole from my colleague Bill Mann, I ran a "Nortel" search on eBay and came up with about 5,000 listings. I'm not sure exactly what that says, but I do know that the only other line item growing at a decent clip at Nortel has been the share count. (Yay! No, wait. Boo!)
Results like these, of course, are the prime reason that Nortel has one of those textbook tech-stock "middle finger" charts. No, really.
While Nortel claims that it wants to restore its credibility, I can't help noticing that the bullpuckey starts with the company's description of itself: "Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information."
Want to impress us, Nortel? How about just saying, "We make and support networking gear, though we don't make money doing it. But we're working on that. Promise."
Until Nortel drops the fancification and admits it's got a self-perception problem, I'm really not so sure it can clean up at home. And if it can't get things done there, what on earth can it do for investors? Fools, there are better places for your money.
Seth Jayson has never been fond of networking types, but he certainly prefers the ones who don't lose their shirts in the attempt. At the time of publication, he had no positions in any company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.
