Nortel Comeback Trail Strewn With Obstacles

Nortel Networks(NT Quote) claims to have taken a major step on the comeback trail this week, although a big question mark still hangs over the company's long-term strategy.

The Ontario Superior Court of Justice granted a request to extend Nortel's creditor protection Tuesday, and the firm now has a stay of proceedings until May 1.

Nortel also obtained an order from the Canadian court allowing it to postpone its annual general meeting for shareholders.

"The postponement will allow Nortel's senior management to fully focus on the preparation of Nortel's comprehensive restructuring plan and avoid the significant costs associated with annual shareholders' meetings," the company said, in a statement.

Nortel's endgame, however, remains something of a mystery. The firm, which suspended the sale of its key metro Ethernet networks division last week, promised only that it will emerge from creditor protection "a more focused and competitive company" in an email to TheStreet.com.

Ernst & Young, which is monitoring Nortel's restructuring, gave a glimpse into the company's overhaul in a recent report to the Canadian court. Cost-cutting efforts include a "detailed plan" for a reduction of Nortel's global workforce, a review of real estate, property and IT equipment leases and cuts in discretionary spending, it said.

Clearly, the next few months could either make or break Nortel, which continues to elicit extreme reactions across the tech sector.

Depending on whom you speak to, Nortel is either valiantly working its way through incredibly difficult circumstances or teetering on the brink of oblivion.