Canadian Stock Profiles| Canadian Stock Profiles |
| In early July 1999, the Financial
Post reported that Nortel Networks topped the list
of Canadian companies adding shareholder value for the
second year in a row. Financial research firm Stern
Stewart & Co. of New York compiled the study.
Nortel added over $23 billion in market value in 1998. There was some concern after Nortel acquired Bay Networks in 1998 that it would detract from the company. In fact, it has added to the company considerably. Formerly known as a manufacturer of telephones, Nortel has become increasingly active in high end electronics and networking. It not only competes head to head with American telecommunications giant Lucent, it also stands toe to toe with networking superstar Cisco Systems. The company has reinvented itself even to the point of changing its name from Northern Telecom to Nortel Networks. Previously not prone to maintaining a high public profile, the company launched an advertising campaign to make itself a recognized household brand. That was the work of former Nortel President Dave House, the marketing whiz who came to Nortel by way of the Bay Networks acquisition. House announced he was resigning on June 16th to move back to his beloved California, his work with Nortel done. Prior to becoming CEO of Bay Networks, House worked for twenty years at Intel where he coined the trademark slogan "Intel Inside". John Roth, Nortel Vice-Chair and CEO, who engineered the Bay takeover and is known for his technical savvy, remains with Nortel. In June 1999, Nortel announced a half billion dollar deal with Sprint and MCI Worldcom announced plans to launch trials of Nortel equipment. This is a company on the move in the Internet revolution in a big, big way. In an interview with the French daily Le Figaro in early October, Nortel CEO John Roth argued that his firm was better prepared to meet the demands for increased speed in networking because of its fibre optics expertise. Nortel's networks can transfer data at ten gigabytes per second, far faster than any of its competitors. And Nortel's products are backwards compatible, saving clients enormous amounts of money. Cisco's approach says Roth, requires customers to replace equipment wholesale. In late October 1999, the company announced a jump in operating profit for the latest quarter of more than 30%, exceeding analysts' expectations. Not surprisingly, Nortel's stock has advanced significantly. The company continued to make acquisitions and expand into 2000. In the May of 2000, BCE, Nortel's largest shareholder, divested itself of most of its Nortel holdings in a distribution to shareholders. With the shrinking of BCE's interest in the company and Nortel's increasing size, it now (Aug. 8, 2000) makes up about 35% of the TSE 300 Index. The stock has long been a favorite of stock analyst Pat McKeough of The Successful Investor because it makes solid profits in spite of heavy R&D spending. It is still a buy for McKeough as of this writing. Shares Outstanding: 3,086,000,000
Wright Investor Services Report Address: Phone: 905-863-1103 This page first published:
Oct. 31, 1999 |
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