Saturday, January 17, 2009

Weekly recap - Slow start to the new year

The markets and UT stock initially exploded out the gate in the new year but has made a complete reversal with the DOW, Nasdaq, and S&P now down 5.6, 3, and 5.8% respectively. UT had been up as much as 18% at $2.18 but now down 26 cents or 14%. UTs Q4 has closed so there is not much news as shareholders await for the results in Feb. Here are a few highlights (lowlights) from other company news.

Nortel bankruptcy - With deteriorating performance and huge debt loads, Nortel "rewarded" long time shareholders/employees with a New year's present by filing for bankruptcy. Six months ago, I lost money in Nortel buying in the $7 range and quickly unloading in the $6 range right after their earnings call. A couple of months before that, their management team was very upbeat in their analyst meeting projecting 4% operating margins and low single digit revenue growth. Their highly paid CEO Mike Z (from GE six sigma or whatever management crap the business people are learning) has even one upped UT performance by now filing for bankruptcy. My main frustration however was not shorting the crap out of Nortel after the earnings call six months ago. Their CEO seriosuly sounded like a football jock that has his head cut off. Talk about a true cave man. While UT balance sheet is very good compared to Nortel, the company continues to lose a lot of money and shareholders should continue to be concerned about management's actions/inactions. Nortel has $2.4 Billion in cash and around $10b in revenue. And they filed for bankruptcy and won't even pay employees that recently signed termination contracts. It is sad when management continues to get hefty salaries while shareholders get nada.........BTW, there seems to be existing employees that have started a Facebook site for Nortel called, "I still believe".......sheesh.

Sonus Networks - Another outstanding telecom equipment provider that has shareholders interests at heart - NOT. Their stock is down to $1.38, down from $4-5 range this year and $8s just last year. They have recently cut more costs but have actually given 25% shareholder Legatum a couple of board seats. Really nice of them. Good luck to Legatum and other shareholders. Atleast, they will have a say on trying to turn around another "great" management team.

Citigroup/Bank of America - These companies traded in the $50 range in 2007 and now at $3.5 (C) and $7 (BAC) showing how great managers US companies really do have. Does it take all these business degrees and "experience" to run these companies to the ground? And how about the management/BOD at Sandisk, Yahoo, Take Two and other companies that have amazingly received mega buyout premiums the last year and walked away! Really amazing....

Palm - On a brighter note, Palm's turnaround has had significant traction. They had hired former Apple Podfather John Rubinstein and he has managed to introduce a new operating system and new products. Previous rumors of Apple buying Palm is resurfacing as well with Jobs health and synergies of the two companies. Palm stock has gone from $9 to $1 back to $8 in less than six months! I tip my hat to Mr. Rubinstein for achieving their turnaround since he was hired in 2007. Wasn't that the year UT failed to sell itself and hired Blackmore. Yup, UTs turnaround from 2004 continues as the stock languishes in the $1s and management continues to promise a near term goal of returning the company to profitability.

With no good options, I'm still a believer (at $1.59) just like Nortel shareholders believed to the very end. Hope this one ends up better. Sad.

Have a good weekend everyone.

1 comment:

Anonymous said...

just jump...and take utstarfuc* BoD with you! eom