Nortel Networks Corporation (NYSE: NT) is going to be back at the stock game again. The troubled Canadian telecom equipment provider announced today that it was notified today by New York Stock Exchange that its stock is below the $1.00 price criteria listing standard on the NYSE. If you have been following this, you will see below how this situation seems to just get worse and worse.
Nortel has six months from the date of the notice to bring its averagecommon share price back above $1.00 and the common stock will remainlisted on the NYSE, subject to compliance with other applicable NYSE requirements.
We warned you that this is going to come up as an issue when we calledNortel’s CEO one of our CEO’s TO GO IN 2009. Nortel said it willnotify the NYSE within the required 10 business day period that itintends to cure the deficiency.
The company stated in its release, "If the average closing price doesnot sufficiently improve, Nortel may consider presenting a proposal toits shareholders for a consolidation of its outstanding common sharesat its annual meeting planned for spring 2009." If you don’t get thatimmediately, that is the groundwork for a reverse stock split.
The problem is that Nortel already did a reverse split. Shares felldramatically, like almost all reverse stock splits. Bad situationsdon’t just go away by artificially bumping up share prices. If youhave ever played Three-Card Monte in New York, you already know that theonly "playing" is what the guys are doing to you. Nortel can changeits name to "No-Tel" or it could change the name to "Two Telecom Monte."
Jon C. Ogg
December 11, 2008
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