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    Stock Alert for Nortel Networks Corp. (NRTLQ)

    Nortel Networks Corp. (PINK: NRTLQ) was previously a global supplier of end-to-end networking products and solutions serving both service providers and enterprise customers. Nortel Networks Ltd. (NNL) is the Company’s principal direct operating subsidiary. As of December 31, 2010, the Company had sold substantially all of its businesses. NRTLQ is focused on the sale of its remaining assets, optimizing the value of its intellectual property (IP) portfolio, providing transition services to the purchasers of its businesses, the wind-down of its global operations and other restructuring activities. On December 17, 2010, the Company announced that NNL and NNTC completed the sale of its Ottawa Carling Campus to Public Works and Government Services Canada (PWGSC). On June 29, 2010, it announced that NNL had completed the sale of its 50% plus one share interest in LGN to Ericsson.

    Share Statistics (27-June-11) FY 

    2009

    FY 

    2010

    %  

    Chg

    Q1 

    2010

    Q1 

    2011

    %  

    Chg

    Symbol NRTLQ Revenue, $Mn 3,446.00 620.00 -82.0% 362.00 20.00 -94.5%
    Current price $0.06 Gross marg. 88.2% 14.2% -83.9% 26.8% -10.0% -137.3%
    52wk Range: $0.01-$0.15 Oper. margin -621.0% -55.0%
    Avg Vol (3m): 3,320,540 Net margin 14.2% -657.3% -4728.9% 98.1% -525.0% -635.8%
    Market Cap. 27.90M
    Shares Outstanding 498.21M EPS, $ -0.60 -3.46 476.7% 0.09 -0.21 -333.3%

    Source: Reuters.com, SEC Filings.

    Recent News

    Shares of NRTLQ traded as much as 40% higher yesterday as the bankrupt tech giant’s remaining assets went on the auction block. The Canadian company has delayed the auction for a week after it saw significant level of interest in its approximately 6,000 patents and patent applications.

    According to reports, this portfolio of patents could be expected to generate as much as $1.5 billion in the auction.  Technology giants including iPhone maker Apple, chipmaker Intel, Chinese telecom ZTE, and Canada’s RIM are all expected to be in the list of would-be buyers.  NRTLQ entered into a stalking-horse deal with Google in April, which put the opening bid value of the portfolio at $900 million.

    NRTLG filed for bankruptcy in early 2009 and eventually gave up on restructuring plans.  The Company then opted to liquidate all its assets.

    Shars of NRTLG traded yesterday at an intraday high $0.07.   Approximately 12.76 million shares have traded hands during the session, versus the 10-day average volume of 11.25 million.  Over the last 52 weeks, NRTLG has seen a low of $0.01 and a high of $015. It is currently trading above its 50-day moving average of $0.04 and above its 200-day moving average of $0.03.

    Visit NRTLG at www2.nortel.com

    Financial Summary

    NRTLQ reported revenues from continuing operations of $20 million in the first quarter of 2011, compared to $362 million for the first quarter of 2010, reflecting a reduction of 94.5% as a result of the business divestitures and the deconsolidation of its U.S. subsidiaries.

    The Company reported a net loss of $105 million in the first quarter of 2011 , compared to net earnings of $355 million in the first quarter of 2010.  The net loss included interest expense of $79 million, other expense – net of $12 million, partially offset by other operating income of $25 million comprised primarily of billings under transition services agreements and reorganization items of $6 million.

    NRTLG had a cash balance of $775 million as of March 31, 2011, was compared to a cash balance of $807 million as of December 31, 2010.  Restricted cash as of March 31, 2011, was $3.2 billion primarily related to the business divestiture proceeds. The cash balance was impacted by cash used in operating activities of $50 partially offset by a net favorable foreign exchange impact of $9 million, and cash from investing activities of $9 million related to proceeds from the sale of the MSS business of $49 million, which was almost entirely offset by an increase in restricted cash of $40 million.

    Financial Strength (27-June-2011) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 2.85 1.80 2.28 0.71
    Current Ratio (MRQ) 2.85 2.15 2.71 1.04
    LT Debt to Equity (MRQ) 18.72 13.83 136.76
    Total Debt to Equity (MRQ) 29.28 24.55 182.31
    Interest Coverage (TTM) 8.16 0.34 0.78 18.08

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    No data available.

    Technical Analysis

    Source: http://stockcharts.com

    NRTLQ is within its Bollinger Bands. This is a normal condition suggesting that it is neither overbought nor oversold relative to the recent price action.

    The MACD for NRTLQ currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    June27-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Cisco Systems Inc. CSCO 15.03 82.67B 9.39 8.74 1.92 1.82
    Alcatel-Lucent ALU 5.44 12.31B 19.43 10.67 0.51 0.48
    Sonus Networks Inc. SONS 3.14 874.09M 157.00 44.86 3.19 3.07
    LM Ericsson Telephone Co. ERIC 13.70 43.87B 14.57 13.05 1.25 1.19
    Motorola Solutions Inc. MSI 45.72 15.52B 19.37 17.45 1.88 1.79
    Communication Equipment Median 16.67 n/a 1.02 n/a
    Nortel Networks Corp. (USA) NRTLQ 0.06 27.90M n/a n/a n/a n/a

    Source: Thomson Financial

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