There have not been too many positives for Nortel's stock lately, whose performance has been plagued by the company's ability to get its financial restatements done in a timely fashion.  Because of the delays in reporting the results, Nortel (NYSE:NT) stock has been downgraded by the likes of Prudential, Goldman Sachs, and CIBC World Markets, among others.  

For most shareholders, the delay in the restatements has been an unfortunate development, particularly now that the company is making positive strides on the technology side of the equation.  For instance, in VoIP, Nortel has a leadership position in the Class 5 softswitching market, as reported on Light Reading.  Nortel has also a strong position in the wireless market, having been on the short list for many RFPs for CDMA and UMTS tenders.  Despite all the accounting woes, the company still is able to be at the forefront of cutting edge technologies, such as mesh networking.  And the enterprise IP PBX opportunity should be also a positive development, as the existing installed base begins to mature and starts transitioning from TDM to IP (Nortel has a substantial installed base of TDM equipment - Meridian PBXs and Norstar key systems).

Still, all this progress is not as relevant now, as the company focuses in delivering its results before the end of the year.  The bookkeeping blunders need to end in order for Nortel to avoid the unthinkable: delisting.  For instance, the NYSE listing can come up for formal review unless the vendor can file the restatements by year-end.  The company is working diligently in meeting that deadline.  Mark Evans, the technology reporter for The National Post, found the following gem (John Manley, a board member, offered the following comments on the accounting efforts):

Nortel shareholders hope that John is right and that this time around, all the numbers will be OK.  In the meantime, there was some good news this week.  Nortel claimed (following discussion with the Office of the Chief Accountant at the SEC) that it will not change its accounting treatment for optical product sales. This is good news, since it might be a clue that the restatements will not go back to the years before 2001.  Hence, it could also mean a higher likelihood that the 2001-2003 numbers will be filed within the next six weeks.  The other piece of good news is that Nortel confirmed what some Wall Street analyst firms (such as Solomon Smith Barney) already suspected to be the case: the NYSE will not begin a delisting review process until after December 30th, and Nortel would likely have an additional three month grace period.

So, in conclusion, Nortel would likely not be delisted (in a worst case scenario) until April 1, 2005. Right now, it looks more likely that NT will file at the latest by January 2005, so it should be able to avoid the bleak delisting scenario. All in all, the probability of such an event was decreased with this week's news. Hopefully, after the restatement becomes a reality, past accounting practices will no longer overhang the stock, and investors will finally be able to focus on the company's fundamentals, technology and market performance.