Nortel gets delisting notice

Telecommunications is, by most analyst's accounts, one of a relative handful of industries that continue to do well during the recession, but Nortel apparently hasn't gotten the memo. Other more successful players are already pilfering Nortel's VARs, and if things weren't bad enough for the money-losing company, now they've gotten a delisting notice from the NYSE. So are you still selling Nortel? Their technology is good, there's no doubts there. But more than half of this business is about perception, not reality. Make no mistake, Nortel's in some serious trouble and they're bleeding money, but so are a lot of other companies these days, and there's still ample chance for a turnaround. That said though, it's hard to sell a company that's losing money. That's why nobody wants to buy a domestic car these days--what if they go under? Where am I going to get parts? Who's going to service it? If Nortel goes under, running a shop with Nortel equipment would be like having a fleet of Studebakers.

Being delisted from the NYSE by itself simply means that their share price doesn't meet exchange rules; specifically, the price has to be above a dollar. In reality, whether it's traded on the NYSE or over-the-counter doesn't mean much regarding the soundness of a company or its products. There are plenty of very good companies traded on the pink sheets. But, there's the public perception. Being taken off the NYSE is a loss of status, and when customers are looking to buy, they want a company with a perception of soundness and good standing in the financial community. Of course, the rumors about bankruptcy don't help matters. When a company loses the confidence of the buying public, it gets harder to sell, they lose even more money, and go into a death spiral.

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