Nortel Accounting Woes Continue
Is anyone surprised by the fact Nortel is doing yet another review of its financial statements? This time, it's focused on contracts signed last year. And although the company insists it isn't material, the perception that Nortel is still trying to resolve its accounting scandal is troubling. At some point, Nortel needs to have a clean slate so it can move forward strategically. While investors have to give Nortel and CEO Mike Zafirovski the benefit of the doubt, it is difficult to instill confidence if the past continues to haunt you. It is also important to keep in mind that even if Nortel manages to deal with its accounting demons, the future is challenging. This is a company that needs reduce costs and focus on markets where it can succeed - a challenge in a volatile and competitive industry in which the economics are dramatically changing. This year looks to be one dominated by rebuilding a solid corporate foundation. Only when this process is completed can the company really focus on driving growth again.
March 10th, 2006 at 11:50 pm
Should we be amazed or confused?
Nortel has certainly acquired a sense of humour hasn't it?
Endless, endless ongoing news is increasingly detracting from their credibility.
I am astounded the benefit of the doubt being lent by the same people who felt the second restatement ( a recount of a recount) would be benign. Well it turned out to be the 5th largest fraud payout on record next to Enron, Worldcom, Cendant, and Time Warner. Perhaps the largest mass orchastrated fraud ever for immediate cash bonuses
(bonuses are the most common motive to this type of white collar crime btw, and weak internal controls are traditionally open season on bonuses. I felt Moodys comment psot fraud an impossibility in their stating “While the company has set forth broad metrics for executive compensation going forward, it remains to be seen how the policy will be implemented. Executive pay practice has been implicated in the prior accounting problems.” The shareholders also want remedy as part of the settlement too, and now this… amazing, just amazing)
They claimed today their short term objective is to increase share value. No kidding Sherliock, they are financed to the gills using cash as collateral printing shares like candy on the way to zero to look solvent as they traditionally dilute more than they earn (100M shares a year they claim “to keep good people”, in other words remuneration )
wow… as analysts and the media are rather polite in this proverbial benefit of the doubt I too was naive to.
A few weeks ago, Fibberuary 23rd, NT was to reveal a pre-cut R&D $1.9Billion long awaited plan (during a stock decline if I may add), that never came. I say pre-cut because they reiterated in boast cutting this most expensive yet least productive R&D so many times over after announcing closing almost 70% of their R&D facilities) so OK… it is not cut as they said, now why did it not come either, it wasn't the recent bad restatement news when they claim they decided to restate only 3 days ago… cintradictions never cease from when one lie has catalayzed into a chronic ideology with these guys. Is it the criminal investigations? What is going on?
They also never got paid by Flex as they said any more repairing internal controls in 18 months they said a year ago is now years away using expensive SAP software, growing faster than market, Q205 tripple profits, the SEC inhibits their forecasts too as per Curries previous conference and bold of him to call them their friend who will fine them .
OK, so now they need to also recount a recount of a recount for 2003 reducing earnings by 99 million! So it wasn't 750M nor even the restated restated 450M, it is supposedly the estimated recount of a recounted recount of $351M? Are they going to change these numbers if they are “dissatsified” with them again?
I wonder why CEO recently claimed 1998 was last profitable year ( I thought it was 1997, anyways) avoiding 2003 entirely. Could there be a 4th restatement? Hey don't laugh, we asked the same joke about a 3rd. A great company in 5 years amidst a rapidly changing technology sure sounds pretty optimistic with a “Tall mountain to climb” from “ground zero”, as credible as delivering an R&D plan on time. he even called an analyst delinquent for not upgrading his stock days before the S&P reduced the 12 month target from 3.50 to 2.50, I wonder what it will be now?
Bad enough we have Mike startiung day one defrauding MOT, they rank 5th in largest fraud settlements, but are these endless punch lines a direct reflection of what appears to be the most obvious usually holds true?
If they default on debt the bondholders will blow a gasket. If they do not get a waiver for their recent financing based on earnings using cash as collatera,l an analyst claimed this will “severely” effect their solvency.
They said if they restate again, they are gone, well they need to restate again.
They said if they defraud again (overstate income?), they are gone, well they overstated financials for 2003, 2004, and first 9 months of 2005.
One stike and they are out, here they have 2, and the media and analysts take this so benignly…
It is endless I can't even list a fraction of their punch lines, like optimstic Q404 that bombed, boasting 3.4 billion cash paired with a delay last year. Like no change in their cash position with a cash decline from 2003's $3.9B to 3.4 to 3 to 2.4 now ($1B frozen using cash as collateral)
Too much is benign for such a trainwreck of endless, endless, endless follies…. Personally, I do not see them making it this rapidly changing sector even in 5 years even if they had the sustainability amidst all these failed ventures and follies, and increased compeition as we get this proverbial wait and see now extended even longer, years out…
wait, wait wait as it tanks, hype hype hype to buy more shares, all by the 5th biggest fraud that has to restate a restated restatement yet again