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Even though Nortel Networks Corp. has shrivelled into a raisin of its former glory, it still has the power to alarm. On Wednesday, the telecommunications equipment maker lowered its full-year forecast, ratcheting its sales down by 2 per cent to 4 per cent, versus an earlier forecast.
The stock plunged 30 per cent on the news, to $4 – a new low. After accounting for a 10-to-1 stock consolidation, the shares are trading 99.7 per cent below their peak during the technology bubble of the last decade. But for those investors who gave up on Nortel years ago, there is still something to be concerned about here. In its statement, management blamed the revision on “a sustained and expanding economic downturn” – potentially scary words for other companies.
“If Nortel's trouble traces all the way back to the consumer, it means that sales of cell phones, wireless plans, and broadband services are likely to slip,” said Douglas McIntyre, writing on the 24/7 Wall Street blog. “So far, spending on these goods and services has been a bright spot for the economy. That may be over and done with.”
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Marcus L from Calgary, Canada writes: As if the incompetent management at Nortel has any real market insight into anything other than their own failures. No credibility in their release whatsoever, other than Nortel's financial numbers.
- Posted 17/09/08 at 10:32 AM EST | Alert an Editor | Link to Comment
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