zhongguoren
知名会员
- 注册
- 2002-03-03
- 消息
- 166
- 荣誉分数
- 8
- 声望点数
- 178
Brokerage downgrades Nortel stock
UBS Warburg says shares could fall by nearly half this year
Bert Hill
The Ottawa Citizen
Saturday, March 16, 2002
Nortel Networks stock could fall another 40 per cent because the steep decline in spending on telecommunications gear shows no sign of lifting, according to an influential U.S. stock brokerage.
Yesterday, UBS Warburg slashed its sales and profit projections for Nortel, saying Nortel will lose $800 million U.S. this year and be lucky to show a small profit of about $250 million in 2003.
"Further weakness in the U.S. market is putting pressure on capital spending," UBS said. A spending pickup might come in the second half of the year, UBS said, but it could be tempered by wireless consolidation.
While UBS slashed its 2002 price target to $6.25 U.S. from $7.50, it warned that "downside risk can be as low as $3 U.S. in the extreme case."
Nortel shares closed in New York at $5.13 U.S., down eight cents. On the Toronto stock market, they fell 19 cents to $8.01, down $1.60 in the past seven trading days.
"We see no compelling fundamental catalyst to propel the shares from these levels," UBS Warburg said.
If UBS is right about weak sales, Nortel will likely fail to meet commitments to its banks to return to profitability by the final quarter of this year. It would then have to post substantial securities to its bankers and likely slash operating costs.
It would probably have to tap credit lines and could have trouble raising more debt. It has already cut quarterly operating costs to $3.8 billion, but it is struggling to generate sales of only $3.1 billion this quarter -- down 10 per cent from the previous quarter. Analysts expected only $3.2 billion in sales in the next quarter and $13.4 billion for the year.
Yesterday's news capped a bad week for Nortel. Its credit ranking slipped, for the third time since August, to one rung above junk status.
"I don't know if there's going to be more job cuts," Nikos Theodosopoulos of UBS Warburg said. "But ... they will need to raise cash, either through asset sales or through tapping into their credit facilities."
© Copyright 2002 The Ottawa Citizen
UBS Warburg says shares could fall by nearly half this year
Bert Hill
The Ottawa Citizen
Saturday, March 16, 2002
Nortel Networks stock could fall another 40 per cent because the steep decline in spending on telecommunications gear shows no sign of lifting, according to an influential U.S. stock brokerage.
Yesterday, UBS Warburg slashed its sales and profit projections for Nortel, saying Nortel will lose $800 million U.S. this year and be lucky to show a small profit of about $250 million in 2003.
"Further weakness in the U.S. market is putting pressure on capital spending," UBS said. A spending pickup might come in the second half of the year, UBS said, but it could be tempered by wireless consolidation.
While UBS slashed its 2002 price target to $6.25 U.S. from $7.50, it warned that "downside risk can be as low as $3 U.S. in the extreme case."
Nortel shares closed in New York at $5.13 U.S., down eight cents. On the Toronto stock market, they fell 19 cents to $8.01, down $1.60 in the past seven trading days.
"We see no compelling fundamental catalyst to propel the shares from these levels," UBS Warburg said.
If UBS is right about weak sales, Nortel will likely fail to meet commitments to its banks to return to profitability by the final quarter of this year. It would then have to post substantial securities to its bankers and likely slash operating costs.
It would probably have to tap credit lines and could have trouble raising more debt. It has already cut quarterly operating costs to $3.8 billion, but it is struggling to generate sales of only $3.1 billion this quarter -- down 10 per cent from the previous quarter. Analysts expected only $3.2 billion in sales in the next quarter and $13.4 billion for the year.
Yesterday's news capped a bad week for Nortel. Its credit ranking slipped, for the third time since August, to one rung above junk status.
"I don't know if there's going to be more job cuts," Nikos Theodosopoulos of UBS Warburg said. "But ... they will need to raise cash, either through asset sales or through tapping into their credit facilities."
© Copyright 2002 The Ottawa Citizen
