Environmental Award Trashes Stock Price

The two things may not be connected... but maybe they are. Beleaguered former high tech giant Nortel Networks were the winners of the Clean Air Day Award for "Outstanding Contribution to Clean Air" at the 2006 Smog Summit held in Toronto. The market’s response? Nortel’s share price tanked on impact. This is not a good message to the market.

OK, to be very honest, there are other factors at play here. For instance, UBS Investment Research lowered its target price from $3. to $2.55. The market responded predictably and NT-TSX shed another six cents to close the day at $2.42. That's two dollars and 42 cents. The next day -- Thursday -- it dropped a couple more cents to close at $2.40. These numbers are just astonishing for those of us that remember the $125. per share highs Nortel saw in 2000.

I've been hanging on to Nortel shares for a while now. (Not that long, that's for sure. I got in well below those pre-dot-com bust prices.) For some demented reason, I believe in Nortel. At least, I certainly believe they can break three bucks a share. Why not? Even with all the dismal news that chases the best press releases they can come up with, Nortel is a company with a lot of value. And a lot of good news.

The environmental thing -- as cheery as it is -- is just the tip of the iceberg. This is a company whose PR department sometimes seems to be working 24/7. "China’s Ministry of Railways Accelerates Ticketing Services with Nortel Solution," they chirped on the 7th of this month. "Nortel Advances Ethernet for Coming Wave of Video Services," they blared on the 6th. "Nortel Introduces New VoIP Technology for Small, Medium Service Providers," they chirped on the 5th. Unfortunately, in between all the happy stuff, they posted a few other things and a few of those other things have been of the sort that put cautious investors on alert, now in the age of Enron.

I don't care if my stock savvy friends laugh at me when I tell them I'm holding Nortel. I believe. I can't seem to help myself. This is a company with a lot going on: a lot of energy and a lot of good ideas. (Not to mention a brand new, shiny environmental award.)

In a Globe & Mail article dealing with the cut to Nortel's price targets, Alexander Henderson, an analyst with Citigroup Global Markets, called Nortel a "hold-speculative risk."

Hubba-hubba: I can get behind that. In fact, at less than two-and-a-half-bucks a pop, I'll just have to go and buy a bunch more.