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Well, I guess I was somewhat correct about the short term win on Nortel.

As you’ll recall from Monday, I bought my Nortel for about $0.72 and I just sold at today’s close for about $1.07 (US Priced). Not a bad return for a four day investment. I suspect tomorrow Nortel will trend downward, given that it’s a Friday and there will be some profit takers. If that happens, I will buy in again tomorrow afternoon or Monday AM. I still believe in my original investment strategy, however, and Nortel is not a long term hold for me. Next big announcement and I’m out for sure, possibly for good.

Maybe I can rebuild my RRSP just trading this one stock. I just inflated it by 45%. 🙂


—— Reuters Nortel shares race higher as cash concerns ease Thursday October 24, 3:05 pm ET By Franco Pingue

(Adds analyst comment, updates share price. Figures in U.S. dollars unless noted)

TORONTO, Oct 24 (Reuters) – Shares of Nortel Networks Corp. (Toronto:NT.TO – News; NYSE:NT – News) charged higher on Thursday as fears that the company’s cash reserves were drying up began to ease, while some investors rushed to cover short positions.

ADVERTISEMENT Nortel shares, which have soared 149 percent since touching a low of 65 Canadian cents on Oct. 10, were up 26 Canadian cents, or 18 percent, at C$1.67 on the Toronto Stock Exchange.

In New York, the shares were ahead 17 cents, or 19 percent, at $1.07.

Short selling occurs when investors borrow shares and sell them, hoping to buy them back at a lower price. When markets rise, short sellers must quickly buy back the shares before the price runs too high.

“Things can only keep going down forever if you think they are going bankrupt,” said John Wilson, an analyst with RBC Capital Markets.

“Now that people are realizing that Nortel is not going to go bankrupt, or that there is a very low risk of that happening, then they are willing to pay a much higher price for the stock.”

Last week Nortel, one of the world’s largest telecom equipment makers, posted a narrower third-quarter loss, in line with expectations, and said it was on track to return to profit.

Wilson, who has an “outperform” rating on Nortel shares with a $2 target price, also said that he does not expect spending in the tech industry to rebound next year.

“Next year we fully believe (capital expenditures) will be down again, spending will be down and Nortel’s revenues will be down, but as long as you don’t think they’re going bankrupt there is a price for everything.”

Benoit Chotard, an analyst with National Bank Financial, who feels Nortel’s stock was oversold recently, also does not see a spending recovery in the battered technology industry until 2004.

“The perception was too negative on Nortel,” said Benoit Chotard, an analyst with National Bank Financial. “Things are much better than what was anticipated in the context of a very tough environment.”

Chotard has a “market perform” rating on Nortel shares with a target price of C$1.50.

($1=$1.56 Canadian)

On Monday, October 21, 2002, at 07:52 AM, Ian Andrew Bell wrote:

> Nortel is probably going to experience a rally today based on news of
> a Wireless deal in China worth $280M. But they could experience a
> more sustained rally over the next two weeks as rumours fly around
> about their intended reaction to their plight.
> Now, I have virtually nothing to substantiate these predictions, so
> please take them with a grain of salt:
> 1) I think that Nortel has put their Enterprise products & services
> group, which is profitable, in play. I suspect their goal is to sell
> it for some quick cash. I would expect this to get between $5Bn and
> $7Bn and would stem the tide of impending doom for several years.
> 2) I think that they’ll use part of that money to write down and
> shutter the Optical business. Beneficiaries of this will include
> Juniper and to a lesser extent Cisco.
> I think that this puts the entire company very much in play for an
> acquisition by Cisco or Alcatel, except for one thing: cash in the
> bank.
> So, this morning I bought Juniper and Nortel, and we’ll see what
> happens.
> -Ian.
> ———–
> FoIB mailing list — Bits, Analysis, Digital Group Therapy


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