Nortel Hot on Indian SMBs

By Mark Evans | Published: October 6, 2006

After flaming out in India’s wireless market ($500-million contract with BSNL that produced more than $200-million in losses) $327-million of losses on $340-million of revenue, according to Nortel’s 2005 10-K), Nortel is shifting gears by focusing on the country’s “burgeoning” small and medium size business market. Nortel has introduced new products, including switches, routers and access points that will feature the successful BCM-50 (really, it’s one of Nortel’s best-kept growth secrets) and a digital hybrid PBX from the LG-Nortel joint venture. Ravi Chauhan, managing director with Nortel India said, “the SMB segment is going through a process of evolution and businesses are looking at technology to enable them to grow bigger. Nortel is gearing up to become a dominant player in this segment.” Now, that’s confidence.

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  • Observer

    BSNL Deja vous?

    “Nortel Says Prices Network Below $500 In India

    09:17 EDT Thursday, October 05, 2006 NEW DELHI -(Dow Jones)- Canada’s Nortel Networks Corp. (NT) said Thursday it has priced its technology network equipment for small- and medium-sized businesses below $500 in India, its lowest-ever price globally, aiming to capture the country’s potentially large market.

    “SMBs (small- and medium-sized businesses) starting base for Nortel is going to be India,” E.R. Ashok Kumar, director-SMB, Nortel India Ltd., said at a news conference.

    Nortel sells its network equipment in more than 100 countries, he said.

    There are 7.6 million SMBs in India, which are defined as businesses with fewer than 250 people using a single network, said Kumar.

    Nortel India executives declined to disclose the sales potential of the company’s SMB business following the introduction of the low-priced product. ”

  • Marek

    After flaming out in India’s wireless market ($500-million contract with BSNL that produced more than $200-million in losses),
    ???
    Nortel admitted to lose $328 mill on BSNL so far
    and the revenue was much less than $500 mill /$340 mill?/

  • observer’s psychiatrist

    Dear blog members,

    my sincere apologies as cognitive therapies don’t seem to offer any progress or improvement to the noted yahoo’s better known as jamezzz(observer) and Marek (yes4appi)

    these two outpatients have been failing miserably at any signs of improvement with their cognitive therapies, however the least I can offer as a professional towards other blog members looking for thoughtful insight,is to know in advance that these two (jamezzz,yes4appi) outpatients have been wreaking havoc on various message boards,imposing their obsessive minded views without regard for well documented data and facts, but chose to rant their own paranoia onto well meaning individuals who may express an interest in gauging the potential return on investment in Nortel, as it continues through its rebuilding phase on the road to financial health.

    perhaps if this obsessive disregard towards unsuspecting blog members persists, I may have no choice but to press the legal sytem to have these two outpatients (jamezzz, yes4appi) involuntarily committed to inpatient treatment of their exhibited mental instability.

    yours truly

    the psychiatrist

  • Not Observer

    7.6 Million potential customers …. hmmmm …. not a bad market opportunity!

    People need to understand that selling a 2G wireless network to a state run agency is very different from selling to a 100 person small business. It would be like comparing a sale to Wal*Mart versus your local independent hardware store. The sales fundamentals are completely different.

    What if Nortel can gain a 10% market penetration over the next 5 years. That would be 760,000 new customers. So what exactly is wrong with that?

  • Jerry

    Mark, do you still believe that you were right estimating Nortel’s BSNL contract loss at $200 mill?
    ($500-million contract with BSNL that produced more than $200-million in losses),

  • http://nortel.wordpress.com/ nortel

    to be precise, nortel said it had booked losses of approximately $266 million and revenue of about $228 million from the BSNL contract as of nov. 2005. the contract was originally slated to be worth $500-million but nortel was looking to reduce the amount.

  • Mary

    Mark, you posted this one.
    http://nortel.wordpress.com/2006/06/13/nortel-bows-out-of-india/
    This entry was posted on Tuesday, June 13th, 2006
    It says about $327 mill loss to date on $350 mill deal

  • Mary

    Mark, tell us again.
    What is Nortel’s loss on BSNL deal?
    Is it
    a. $200 mill
    b. $266 mill or
    c. $327 mill?
    Or correct your original post.

  • http://nortel.wordpress.com/ nortel

    mary,
    here’s the best answer as far i can tell: from nortel’s 2005 10-K, the company said it had revenue associated with BSNL of $248-million for 2005 and 2004, and expected another $92-million of revenue for 2006. the company posted losses of $148-million in 2005 and $160-million in 2004, while it expected another $19-million of losses in 2006.
    some back of the envelope math suggests nortel had losses of $327-million while posting revenue of $340-million.

    cheers, mark

  • Mary

    Would it be fair to say in your post

    Nortel Hot on Indian SMBs

    After flaming out in India’s wireless market ($340-million contract with BSNL that produced more than $327-million in losses),….
    ?

  • Mary

    You just did it? Thanks
    Sat 9:48 ;-)

  • Mary

    Mark
    I remember you were the first one to doubt Q2 2005 Profits Tripled un-audited report.
    I’ve just found out Nortel’s restated Q2 2005 report!
    It states
    Q2 2005 was a loss!
    operating earnings – $47 mill loss! net earnings – $33 mill loss
    http://www.nortel.com/corporate/investor/reports/collateral/nnc_q2_2006_shareholders_report.pdf
    but Q2 2006 Nortel proudly reported 8 cents a share profit! /page 1/
    Don’t you think it is very easy for Nortel’s accountants to report profits when in fact Nortel has not been profitable for ages!

  • observer’s psychiatrist

    take it easy yes4appi- a little too much involvement on your part for someone who doesn’t like,trust or believe in the company,don’t you think?

    my services are available, should you need psychiatric help, unlike the incurable jamezzz,there are therapies proven to help people such as yourself.

    regards

    the psychiatrist

  • Mary

    I don’t know what you are talking about, but I know Mark E corrected his view about BSNL loss!
    Why don’t you contirbute something useful to this board?

  • Luke

    positive and constructive thoughts *are* useful. Acting as a moderator *is* useful too. Hating is definitely not.

  • Apple

    Mark Evans, I think you missed new $100 mill NT deal
    http://www.unstrung.com/document.asp?doc_id=148242
    I am still in shock!
    Can anyone try to tell me how it could happen?
    How was it possible that $1.3 bill deal was signed just for $0.5 bill?
    Why I would see that_ 4 years ago _and Nortel would not?
    I wrote a hundred or so posts calculating the deal and the loss in 2004-2005.
    I’ve said it before that deal should be $1.3 bill to have any sense including only 30% profit.
    Why the deal around $1.3 bill was signed at $500 mill?
    Why?
    $800 mill below market and with $500 mill loss!
    Are those responsible for preparation_ calculation_ estimation of the deal_ business Plan still working for Nortel?
    Will they do it again?
    Are those questions important for NT investors?
    Look
    $1.3 bill vs $500 mill!
    CSCO would require at least 60% margin or $1.6 bill!!
    Other vendors still suffer the NT_BSNL deal in India!
    —————
    for new readers on that board
    do you need links to see numbers which I presented above?
    $1.3 bill contract signed for $0.5 bill ?
    How Nortel could do that?
    It’s not history! It’s part of Nortel’s future as Nortel will build the last 2.5 mill lines in 2008 with the tag $40 per line when ERIC gets $100/ line deals from the same BSNL!
    March 12 2008
    http://www.unstrung.com/document.asp?doc...
    and 2004
    http://www.nortel.com/corporate/news/new...
    Can anyone try to tell me how it could happen?
    What I am wrong about that?
    Prove me wrong here on BSNL deal, all the Nortel’s employees posting here and all the ex-Nortel’s employees!
    Mark poll showed you are 75% majority here!

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