Investing

A Nortel (NT) Tie-Up With Motorola (MOT): The Next Alcatel-Lucent

Nortel (NYSE: NT) and Motorola (NYSE: MOT) are in negotiations about putting together their wireless telecom equipment businesses. According to The Wall Street Journal "If consummated, the talks will create a joint venture that likely will have sales of about $10 billion."

Nortel has total revenue of just over $11 billion, so half of its assets would go into the JV. But, Nortel has $3.8 billion in long-term debt and had operating losses in two of its last four quarters. The unit that houses Motorola’s network equipment operation had revenue of $2.7 billion last quarter, but its operating income fell to $192 million down from $223 million in the quarter a year ago.

Wall St. does not think much of Nortel. Its stock has fallen from a 52-week high of 31.79 to its current price of just above $11. Over the last year its shares have done worse than shareholder-bleeding Alcatel-Lucent (ALU). By comparison, Motorola’s stock performance has been excellent.

The telecom equipment business is not terribly attractive now. Not only has Alcatel-Lucent (NYSE: ALU) done poorly but the division of Ericsson (NASDAQ:ERIC) which operates in the industry has had a bad year as has the JV between Nokia (NYSE: NOK) and Siemens (NYSE: SI).

Desperation clouds the mind. Motorola wants to get shareholders, especially Carl Icahn off its back. Perhaps it will sell its largest operation, handsets, and get a good price. But, a merger of two weak operations yields no one any benefit.

Douglas A. McIntyre

Want to Retire Early? Start Here (Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.