Blinders OnThe worst part for Nortel investors might well be the Toronto-based gear seller's apparent obliviousness to its plight. Earlier this month Nortel hosted an analyst conference that painted Europe in only the brightest colors. In fact, to the bewilderment of some observers, Nortel proudly offered up market-share figures that showed it as the No. 2 wireless gear supplier in the world.
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Two years of trauma at Nortel
"Their wireless presentation at the analyst meeting was oddly rah-rah," says Sanford Bernstein analyst Paul Sagawa, who has an outperform rating on the stock. "They put up ludicrous market-share charts, and I don't think anyone there was buying it." By Sagawa's count, which other analysts largely concur with, Nortel is at best a distant No. 4, behind Ericsson ( ERICY), Nokia ( NOK) and Lucent ( LU). And depending on who you talk to, there's a chance the company also trails Motorola ( MOT). Nortel's big plans to ride its momentum in optical networking sales seamlessly into the ultrahot wireless Internet market faltered not long after the company proclaimed to analysts in late 2000 that it had set aside as much as $2 billion to help bankroll 3G efforts, primarily in Europe. Of course, Nortel famously missed early warning signs on the impending collapse of its optical sales. Needless to say, some observers are saying the company has misjudged the wireless opportunity as well.