The man who warned investors a year ago about Nortel Networks on CBC-TV wasn’t gloating when the Titanic of tech stocks hit his $18 target recently and crashed to the $15 range. Ross Healy was hopping mad.

“John Roth (Nortel’s retiring CEO) is walking away with $133 million (his remuneration last year in salary and stock) but investors are walking away with holes in their shoes,” lamented Healy, president of Toronto-based Strategic Analysis Corporation.

“So I can’t feel sorry for someone like that. I have no use for John Roth. I don’t like what he did. It rankles me.”

Healy received hate mail from investors when he gave his $18 target for Nortel early this year when the stock was trading at $45. Many experts thought he was grandstanding. The stock closed the past week at $15.17.



Now, the wily 37-year veteran of the investment business projects the stock could bottom out in the $8 to $11 range.

Asked for his opinion on what Calgary native Roth’s legacy will be, Healy piped in a phone interview: “He will be the business school case on how not to run a company. His biggest mistake was betting everything on fibre optics, somewhat to the detriment, I think, of the rest of the business. He was pursuing the impossible, the pie in the sky. The problem with the pie in the sky is that when it hits you in the face, you look stupid.”

Nortel crashed through the $18 mark June 11 as analysts scrambled to downgrade forecasts and then, four days later, plummeted as low as $13.42 when the company forecasted a net loss of $19.2 billion for the second quarter and announced it would be cutting another 10,000 jobs. Since the stock traded at $123.10 a year ago, it has had about $360 billion lopped off its market cap.

Nortel’s future may depend on how it fares in finding a successor to Roth, who has been under the gun for sloppy disclosure of Nortel prospects. “My guess is that they’ll find a heck of a good operator, someone trained in the Jack Welch (retiring General Electric CEO) mould who can return the company to good old-fashioned bottom-line management style,” said Healy, 58.

“Whoever he is, he’s going to be hard to find, hard to recruit. I think the Chainsaw Als (ruthless one-time Sunbeam CEO Albert Dunlap) may come back into favour.

Healy also criticized the analysts and money managers who were promoting Nortel when it was in the $100 range.

“A lot of kids grew up. They forgot everything they’d learned. When a stock is 36 per cent of the exchange (TSE 300, as Nortel was a year ago), holy crap, you can do a lot of damage,” he said. “They started inventing new measuring sticks for tech stocks. That’s when it becomes a fool’s game.

“I’ve made my share of mistakes when I was a tech analyst, but it wasn’t as dangerous a game then because high tech wasn’t as big. Now, I’m careful of people filling my head with visions of roses and wealth.”

GAGGING ON FIBRE-OPTICS: My warmest regards to those folks who sent cards, letters, e-mails and sour-cream-dipped copies of my column headlined: ‘Analyst’s $18 Nortel Target Too Pessimistic’. And to the boss for caring enough to chain me to a table at the Metropolitan Grill for lunch — the aforementioned column with sour cream and perogies.

On Feb. 28, when Nortel was at $30, I was blind-sided by a falling lampshade and wrote of Healy’s prognosis for the stock: ‘The day Nortel hits $18, we’ll literally eat these words with perogies and sour cream.’

The stock plunged to $18 on June 11.

“I wish I were there,” said Healy. “I truly am sorry that I’m not there to watch.”

PRO'S THREE STARS

Mal Spooner of Toronto-based YMG Capital Management covets GT Group Telecom (GTG.B-TSE), Canada 3000 (CCC-TSE) and Tan Range Exploration (TNX-CDNX).

“GT Group is inexpensive,” says Spooner of the company that provides telecommunications services over fibre-optic infrastructure. “The stock has gone down with sympathy with the difficulty 360 Networks is having.”

Spooner, portfolio manager of the YMG Growth Fund, gives GT Group a 12-month target of $15. It recently traded at $9.45 (year range, $6.75-$28.85).

His 12-month target for Canada 3000 (recent price, $8.19, year range, $7.50-$17.10) is $20.

“The company has posted great progress in both revenue and earnings,” says Spooner. “Just wait till they post once the fuel prices collapse. Obviously, fuel is a very large component of their cost structure.”

Tan Range is exploring for gold in an area adjacent to the American Barrick mine in Tanzania. “American Barrick has just announced they’re exercising warrants in the company (Tan Range) at $1.35 per share and Tan Range is trading at 55 cents,” says Spooner. “My guess is that there’s some gold in them thar hills.”

Spooner’s target for Tan Range is $5 (recent price, .50, year range, .30-.60). Spooner says he still likes Calgary-based Electronics Manufacturing Group despite the pounding its stock has taken, as well as West Fraser Timber.

Those were two of his picks for the column in January. But he has a sell on Baytex Energy, his other pick.

“I’m out of the oils (oil and gas stocks) altogether. It’s all over. It’s going to be pretty sloppy in the next few months, especially for the (natural gas) stocks.”

Spooner’s Record: -4 per cent (West Fraser Timber +35 per cent, Baytex Energy +22 per cent, Electronics Manufacturing Group -69 per cent).

HOT ALBERTA STOCK: International Utility Structure

IUS-TSE $1.5

Up 32 cents (+27.1%) on 99,902 shares (for week ending June 15).

The U.S. Energy Crisis has helped boost orders for this thriving Calgary-based international manufacturer of steel poles for transmission, distribution, telecommunications and light standards. The stock has been one of the high flyers on the TSE in recent months, with a 114 per cent bear-market gain since December.

COLD ALBERTA STOCK: Brocker Technology Group

BKI-TSE 80 Cents

Down 75 cents (-48.4%) on 10,786 shares (for week ending June 15).

So you thought the blood-letting for this Edmonton-based tech company couldn't get any worse? Well, it just did. Brocker's share price was almost lopped in half in a week — on light volume (less than 11,000 shares). Brocker is a holding company with investments in marketing and distribution of information technology. It recently consolidated its shares on a 1-to-4 basis.