Cutback Will Broaden Nortel’s Appeal

Article Excerpt

NORTEL NETWORKS CORP. $2.22 (Toronto symbol NT; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Speculative) plans to consolidate its outstanding shares on a 1-for-10 basis on December 1, 2006. Most institutional investors avoid stocks that trade under a certain figure, say $5 a share, so this move will make it easier for them to buy Nortel stock. Thanks to cost controls, Nortel cut its losses in the third quarter of 2006, to $0.02 a share (pre-consolidation) from $0.03 a year earlier (all amounts except share price in U.S. dollars). Revenue rose 20%, to $3.0 billion from $2.5 billion. Sales could slow in the next year or so as demand for its older equipment falls faster than orders for its new products. But profit margins should rise as the company realizes more of the benefits of its restructuring plan. Nortel is a buy for aggressive investors. investors…

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