The stock market now values Nortel Networks Corp. at the same lofty levels as the most storied of U.S. high technology names, mighty International Business Machines Corp.
Nortel shares jumped $1.74 (U.S.) to close at $68.99 on the New York Stock Exchange yesterday.
With about 2.9 billion common shares outstanding, Brampton, Ont.-based Nortel is now being valued at $200.6-billion. That fell just short of IBM's total valuation of $201.7-billion at the end of the day yesterday.
At times during yesterday's session, Nortel edged out Big Blue. But a late-day surge pushed the U.S. juggernaut higher at the close. IBM shares closed up $4.03 at $113.78.
Meanwhile, Nortel had revenue of $22.6-billion last year, compared with IBM's $87.5-billion in 1999.
Duncan Stewart, a partner at Tera Capital Corp. and portfolio manager of the Navigator Canadian Fund, believes Nortel is poised to seize the torch from Armonk, N.Y.-based IBM in more ways than one.
He says the Canadian company clearly has greater momentum in sales, research and technology.
"People want to see revenues growing," Mr. Stewart said, "It's that sense of acceleration -- that sense of a company whose future is so bright they have to wear shades."
Nortel's latest surge may be fuelled by investors' expectations for second-quarter results, which are scheduled to be reported in July, Mr. Stewart said. The company has also announced several new contracts.
"People are anticipating the second quarter to be very strong."
New York-based Lehman Brothers Inc. may also have boosted investor confidence in Nortel this week when they named the company to its list of "10 uncommon values".
Nortel, Mr. Stewart said, has vaulted into the position of a standard-bearer that creates a buzz among the techies with its breakthroughs in fibre optics.
This month, Nortel unveiled its work on a new fibre-optic laser that is four times faster than those now running the Internet.
Mr. Stewart said the company's work is as exciting and revolutionary as any in high technology.
But Big Blue, which started out making office equipment and typewriters, then led the way in computers as one breakthrough after another came out of its vaunted research labs, has essentially become a service company.
Robert Djurdjevic, president of Annex Research in Phoenix, Ariz., said Nortel's virtual market cap parity with IBM "boggles the mind".
But he said Nortel's soaring share price is symbolic of the shifting waves in technology.
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