Nortel Insider – by Desk Jockey

I have noticed that there is a lot of undeserved hatred being leveled towards Nortel and by extension, its employees. One need only read the latest stories on CBC News about Nortel and the comments to get an idea of how the public at large feel about the company.

Many of the comments are very bitter and hateful. Some of them say things like “good riddance” in response to the coming layoffs and still others think that the loss in severance and pensions of many innocent employees is something that “they deserve”. Other suggest that employees have been “feeding at the trough” for too long and “had it coming”

These claims are patently untrue. Is working your entire career, helping to build one of the biggest companies in the world, only to watch it destroyed by despots and criminals and watch your life and those of your coworkers suffer considered “fitting”? I personally have seen entire teams work overtime into weekends, sacrificing time away from family and friends, only to be laid off and have their severance removed. This experience should not be wished upon anyone.

Nortel employees have been through enough hardship from due to bad leadership. Please do not subject to them to any more unwarranted hate. To hate and feel contempt for them is akin to hating the civilians of another country that yours may be at war with. It’s wrong and unjustified as they are honest hard working people like everyone else.

To those who have lost lots of $$$ on stock: Your anger is understandable, but Nortel employees were not responsible. The former leader’s criminal behaviors (Dunn) show who was truly responsible, unfortunately our justice system seems to protect the biggest criminals at the expense of the little guy. Unfortunately Nortel’s reputation has suffered and continues to suffer under the tyrannical leadership of the few so called privileged and elite.

Has employee morale been reduced? Yes, of course! But does this mean that they have turned into bad people? Most definitely not! Instead, their resolve and respect for one another has increased. The rank and file are the ones who have suffered the most under the many iterations of bad leadership that have plagued and continue to plague Nortel. They do not deserve the enmity that should be reserved for the people who got us all into this position we are in. We remain committed and loyal to one another.

When thinking of Nortel, one must be be careful to distinguish Nortel the company from Nortel’s leadership, which over the years has shown utter contempt for shareholders, employees and the public at large with their lavish bonuses and profiteering from the demise of this great company. Like hyenas and vultures they shamelessly seek to benefit from a disaster and in doing so, bring undue hardship on many. These are the ones who have destroyed Nortel and caused hatred of it among the public at large!

The executive has used this “hatred” of Nortel in an attempt to deceive employees that there is a “media bias” against Nortel and that is why Nortel is in the position it is in today. By doing this, they attempt to shift the blame for their misdeeds away from themselves! In reality, a “bias” exists against the executive but this “bias” is actually justified criticism of their ostentatious behavior in the face of the company’s financial crisis, which they have had a very real part in creating.

So in conclusion, please remember that employees have been victims just as much as the public and shareholders. Many have also lost much of their own money due to NT stock fraud.

With NT having traded below $1.00 per share for the past consecutive 30 trading days, the NYSE has exercised its right to notify Nortel of its obligation to meet exchange minimum standards for continued listing.  What this means is that Nortel has 10 business days to notify the NYSE of how it plans to solve this dilemma and ultimately six months to bring its average share price back above the $1.00 minimum.

This could not have come at a worse time.  With news of the bankruptcy exploration options fresh in people’s minds, it seems as though the endless stream of bad news will never end.  As it doesn’t seem that NT will make it back above $1 due to shareholder confidence, Nortel is left with one option if they wish to avoid a delisting: Another reverse split.

The last reverse split was made shortly after Mike Z. took command, and its move heralded a new age at Nortel.  With the 3-5 year plan, things were supposed to get better and the reverse split, approved by shareholders, was meant to be a signal that Nortel meant business and intended to maintain shareholders’ trust.  

But yet here we are a few years later with management seriously considering bankruptcy, with their only defence that “no filing is imminent”.  Even if shareholder did approve another 10-1 reverse split, this would only bring NT up to the $4-5 range, given current prices.  How long would this last for? Just three months ago, NT was above the $5 mark.  Furthermore, with a stock consolidation like this, the number of outstanding shares would fall from ~500 million to 50 million.  We are not sure what sort of minimums the NYSE has on the number of shares either and whether this will affect any decision to call for a reverse split.

If things continue as they are, NT will be relegated to an OTC stock.

Note: The following is a reply posted in response to an article on AAN. 

Unfortunately, these are the facts, plain and simple. There are those that do not like the truth and have personally attacked broadbandbill, protosphere, yes4aapl and myself for using critical thought to explain these failures.

Let me begin by saying that I am a loyal Nortel employee. I love this company and the people that work with me. My coworkers are some of the best and brightest in the industry. It is for this reason that I am most outraged at how Nortel has performed in the past. Not because of the employees (at least the ones I know) but because of poor leadership, again and again.

I, like so many other NT employees, find AAN to be a valuable resource to share our opinions that would otherwise be ignored. Mark you have done a decent job help keep all of us informed. For that reason I found it to be distasteful when others launched personal attacks against you.

The most recent example was a poster who accused Mr. Evans of uncontrollably urinating while writing a blog post that merely linked to an analyst’s negative expectation of Nortel. I naturally found this to be outrageous and after I pointed out this flaw in the poster’s argument the poster later responded with threats of physical violence to “knock me down” and “knock me out”. This is not debate. This is bullying to suppress the facts and news about Nortel.

I came to AAN to find a neutral news source. Like many I had grown tired of the company’s continued disinformation tactics even against its own employees. As recently as this year we had an employee ask why NT stock price was so low. The only answer they got back was that it was media bias and “propaganda”. This is no way to treat employees and insults their intelligence.

I want Nortel to survive. I want Nortel to succeed. But the way to succeed is not to cover up failures, facts or the truth. The way to succeed is to learn from mistakes. Unfortunately there are many who act as mere cheerleaders, turn a blind eye to mis-management all to pump NT and maybe increase their now-worthless shares slightly.

I carry no ill-will towards anyone and wish everyone the best.

Desk Jockey

Speaking of actual insider trading, check out who’s been selling NT.  With the drastic drop in price over the past few days to a week-end close of $0.56 (Mkt Cap: $278.60 Million), you might think that it was haters shorting and institutions jumping ship that were the only ones thinking the price would go down.  But it turns out that almost every single insider trade in the past two years has been a sell! (Thank God for SEC Form 4, or else we would potentially not know about this ugly two-faced behavior)

In fact, the only inside buys were from directors, who likely wanted the shares for the extra votes they’d bring in the next upcoming BoD elections.  Perhaps this is how Mike Z. justified his now-infamous statement of NT being a “bargain at $20″.  The whole affair makes you sick.

In fact, according to analysis by BusinessWeek, the fact that insiders own only 0.22% of NT stock (433,722 shares – worth less than an average house today) suggests that “insiders goals could be less aligned with those of shareholders”.  Gee, who would have thought?

The same BusinessWeek link also highlights the fact that every insider trade for the past 3 months has been a sell.  How these corporate officers can continue to stand up and tell us that things will be okay and that the sky isn’t falling while at the same time dumping NT stock like it is disease is beyond me.  Their capacity to lie through their teeth astounds me. 

I mean, it’s not as if the executive team is in need of cash and thus has to sell their NT holdings, judging by the compensation they received last year - no, it is plainly obvious that they themselves do not believe in the viability of the company or their ability to lead it.  Judge a person by their actions and remember – money talks.

Another note of interest – if the GEnius executive team receives the same compensation again this year, they will earn about 7% of the total current market valuation of Nortel! Great job guys, looking out for #1.