Nortel faces delisting from stock exchange

The news keeps getting worse for telecommunications equipment maker Nortel Networks.

On Thursday the company received notice from the New York Stock Exchange that it faces delisting if it can't get its stock price above the required $1 minimum price tag in the next six months, The Wall Street Journal reported.

Earlier this week, the Journal reported that the company is seeking advice on bankruptcy proceedings.

While Nortel is clearly hurting as most companies these days are from the current economic crisis, the truth is that the company has never fully recovered from the bursting of the telecommunications bubble in 2001 and 2002.

The problem for Nortel is that its bread and butter products are ones used for building voice networks. Over the past decade phone companies have moved away from building networks exclusively used for voice toward converged networks that carry voice, data, and video using Internet technology. While Nortel has tried to keep up with the changing needs of the industry, it has fallen short.

A series of strategic missteps over the years has resulted in the company losing a great deal of its market value. In 2000, Nortel was worth about $250 billion. The company now has a market value of about $275 million.

Mike Zafirovski came on board as chief executive three years ago to help turn around the company. And initially, he had some success building profits from selling wireless gear to U.S. operators. He was investing in new technology, and the company was preparing for the next wave of wireless networks. But then the economy tanked. And phone companies started to pull back on spending. This has resulted in a sharp revenue drop for Nortel.

In September, Nortel announced more cost cutting and said it would sell some of its business units. But so far it hasn't found any buyers for these assets. The company has about$2.6 billion in cash, which some analysts say should help it stay afloat until 2010.

Nortel isn't the only big telecommunications equipment maker to struggle. Alcatel Lucent, which has also struggled to get back on track after the telecommunications boom, announced Friday it is making cuts as it restructures its business.

Shares of Nortel were trading at 38 cents, down 2 cents, at midday Friday.

[Michichael]

Marguerite - Just a quick typo here:

"Nortel was wroth about $250 billion." Should be worth.

"Nortel is that it's bread and butter " should be its, not it's - common mistake.

"to help turn around the company" doesn't really flow. try "to help turn the company around"

"But then the economy tanked. And phone companies started to pull back on spending. This has resulted in a sharp revenue drop for Nortel." Also doesn't flow... try "But then the economy tanked and phone companies started to pull back on spending, resulting in a sharp revenue drop for Nortel."

Otherwise a good article, just grammatical errors!

[btipling]

How can a company that have $2.5 billion in cash be worth $250 million? Why doesn't it just buy it's own stock back?

[btipling]

I mean " a company that has $275 million in cash"

[btipling]

Ugh, I mean "has $2.5 billion in cash be wroth $275 million"

I give up

[Michichael]

You were right the first time, it has 2.5 Billion in cash and is worth 275 million. By buying it's own stock it'd be privatized. That would not help the company at all and just be an added expense. The operating costs of the company are probably in the hundreds of millions a day.

[Anonymous44]

Don't forget liabilities.

[JCPayne]

Years ago I tried to think of the perfect saviour for Nortel. I still think it would have worked had they done it... When Cisco nabbed Linksys to break firmly into the home router market. And Alcatel and Lucent were talking merge Nortel should have nabbed 2Wire ( www.2wire.com ) That could have gotten them back into the saddle again but now there's not really anything household that Nortel makes that is a hot seller. They purchased BayNetworks many moons ago, (The big time Cable Modem company) but the BayNetworks brand is gone now.

[aka_tripleB]

The stock exchange probably need to rethink its delisting rules because soon there will probably only be three companies that can be listed.