Eeek! Investors are past skittish into downright tremulous. News a fresh set of “advisers” had been spotted at Nortel Networks took shares in the telecoms equipment maker down 23 per cent on Wednesday. From a $250bn market capitalisation at the height of the technology boom, it has since lost 99.9 per cent of its value. Nortel’s stock has effectively become a long odds bet on the survival of a group that still brings in over $10bn a year of revenue.

Can it stumble on? Nortel’s fortunes were dented by the sharp decline in telecoms spending after boom turned to bust and by its lack of scale compared with peers. An accounting scandal saw the replacement of management in 2004 and a distracting Securities and Exchange Commission investigation dragged on until this year. Its largest customer, Sprint Nextel, became a basket case, while others began to scale back spending. Management trumpeted growth in Nortel’s Metro Ethernet unit in June, only to announce plans to sell it in September. Investors understandably ran scared.

Even so, no debt is due until a $1bn repayment in 2011. At the end of September, the group had $2.7bn of cash left (against total debt and obligations of $6.3bn). Nortel needs about $1.6bn to fund operations. It will eat through another $300m by year end, then Standard & Poor’s projects cash burn of $550m in 2009, so there should be at least 12 months to find salvation. A plausible explanation for new advisers would be plans to break up and sell Nortel’s parts – for which the groundwork was laid by a recent reorganisation.

The wrinkle, however remains the confidence of customers. Nokia-Siemens is already eyeing the North American market. If Nortel cedes too much market share, deepening losses, its fate will be sealed. A clear indication of its intentions, and the advice it is seeking, is rapidly needed.

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