Now that Nortel has walked away from the UMTS radio access market by agreeing to sell the business to Alcatel, what is Nortel today other than $400-million to $500-million smaller in terms of sales and $200-million more profitable? In other words, what is Nortel’s strategic direction? What’s the IMS strategy? What’s the VoIP strategy? What’s the wireless strategy given Nortel is now focused on 4G, WiMax and CDMA and GSM? Since taking the helm last November, CEO Mike Zafirovski has focused on overhauling the senior management team and cutting operating expenses – two major issues. He has also talked about having at least 20% market share for a business to considerable viable, which is why the UMTS unit was sold. What investors need is a strategic road map to demonstrate where the New Nortel is going? Will the New Nortel reduce its R&D ratio to 15% from 20%; will the New Nortel make strategic acquisitions; will the New Nortel get even smaller as its drive to become profitable? BusinessWeek’s Deal Flow quoted analyst Jeff Kagan saying: “As Nortel redefines their business model I expect more of these kinds of announcements. It seems if they cannot lead and be profitable we can expect to see Nortel get out of any business.” Rich Tehrani also has some thoughts about a smaller Nortel. Update: Some additional insight comes from Ross MacLeod, who used to be the lead developer on Nortel’s UMTS technology.
Now What, Nortel?
Now that Nortel has walked away from the UMTS radio access market by agreeing to sell the business to Alcatel, what is Nortel today other than $400-million to $500-million smaller in terms of sales and $200-million more profitable? In other words, what is Nortel’s strategic direction? What’s the IMS strategy? What’s the VoIP strategy? What’s the wireless strategy given Nortel is now focused on 4G, WiMax and CDMA and GSM? Since taking the helm last November, CEO Mike Zafirovski has focused on overhauling the senior management team and cutting operating expenses – two major issues. He has also talked about having at least 20% market share for a business to considerable viable, which is why the UMTS unit was sold. What investors need is a strategic road map to demonstrate where the New Nortel is going? Will the New Nortel reduce its R&D ratio to 15% from 20%; will the New Nortel make strategic acquisitions; will the New Nortel get even smaller as its drive to become profitable? BusinessWeek’s Deal Flow quoted analyst Jeff Kagan saying: “As Nortel redefines their business model I expect more of these kinds of announcements. It seems if they cannot lead and be profitable we can expect to see Nortel get out of any business.” Rich Tehrani also has some thoughts about a smaller Nortel.
Update: Some additional insight comes from Ross MacLeod, who used to be the lead developer on Nortel’s UMTS technology.