If Nortel is really interested in becoming a major player in the enterprise market, then there might be something to speculation it may be interested in buying Avaya. According to the Wall St. Journal, Nortel and Avaya were in discussions but couldn’t reached a deal after failing on two fronts: a price, and whether Nortel would use cash or stock. Avaya is now apparently the target the privaty-equity and strategic buyers looking to purchase all or part of the company. The big question Nortel watchers need to ask is whether the company is ready and/or willing to make such as a big move. Despite the progress made by CEO Mike Zafirovski in restructuring Nortel, there is still plenty of more work to be done and operating costs to be reduced. An acquisition would definitely complicate the situation. The other question is whether Nortel has no choice but to make such a bold and aggressive move. If Zafirovski is really serious about Nortel become a strong enterprise player AND wants Nortel to gain its status as a tier one supplier, it may have to do something as dramatic as some of its peers (e.g. Lucent, Alcatel, Siemens, Nokia). The last time Nortel made a multi-billion dollar enteprise acquisition, it bought Bay Networks in 1998 for $9.1-billion. For the most part, the deal was a disaster – not unlikey many of the deails that Nortel made during the telecom boom. For more, check out this New York Times story.
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Nortel acquiring Avaya makes sense to consolidate the enterprise voice market and reach the so desired 2nd place as per Mike’s current plans. Cisco does not have such good products or tracking record in this area so it makes a lot of sense to Cisco to buy it as well. The only wrinkle I have about that is when you consider new IP-based technology solutions like Asterisk, which would make Avaya products look like old legacy stuff. The point is, Nortel will pay billions to get something that might work out well in the short term, but not for the long term so is it worth the investment?
Mark Evans
In many ways, this is the same situation that John Roth faced when he went after Bay. Nortel really wanted to get a bigger foothold in the enterprise market but the Bay portfolio was solid as opposed to industry-leading, which is why the deal probably failed to be a success.
The psychiatrist
If the Avaya deal goes through and provided Mike and his team know how to execute properly as opposed to the John Roth era,then that would yield a nice solid legacy base from which to work with.
Remember the MSFT deal lends alot of leverage within the Enterprise space.
That Mike he’s one smart cookie!
many
Another reason Nortel bought Bay was because Lucent was a Bay reseller. It instantly got Nortel sales into a lot of switchrooms they had never seen. Unfortunately Nortel could not execute, they had serious problems with order management and could not figure out how to compensate sales teams for selling both boxes. The Nortel-Bay merger was no more successful than the Wellfleet-Synoptic merger.
Buying Avaya would be pretty stupid unless they got it for a very low price. Avaya (like Nortel) has been gutted of talent. It’s a metaphorically like lashing the sinking Titanic together with the torpedoed Lusitania and hoping they both float.
I seriously doubt Microsloth would be throwing out life preservers either. The Nortel deal being non exclusive is all window dressing.
Casual Observer
The reason Nortel’s other deals were a disaster is because of Nortel. The Bay deal would have worked out better if not for the poor management of Nortel. This one would be too but for entirely different reasons. John Chambers must be sitting back and laughing somewhere as Cisco gains market share at the expense of everyone else.
Nortel would be better off riding the last boom in this economic cycle and seeing if they can survive it. If they can’t turn things around by 2008, then just take the company private.
http://www.accelerateyourtraining.com/y-customer-service-phone-training.html Scott
Nortel Interested in Avaya?
If Nortel is really interested in becoming a major player in the enterprise market, then there might be something to speculation it may be interested in buying Avaya. According to the Wall St. Journal, Nortel and Avaya were in discussions but couldn’t reached a deal after failing on two fronts: a price, and whether Nortel would use cash or stock. Avaya is now apparently the target the privaty-equity and strategic buyers looking to purchase all or part of the company. The big question Nortel watchers need to ask is whether the company is ready and/or willing to make such as a big move. Despite the progress made by CEO Mike Zafirovski in restructuring Nortel, there is still plenty of more work to be done and operating costs to be reduced. An acquisition would definitely complicate the situation. The other question is whether Nortel has no choice but to make such a bold and aggressive move. If Zafirovski is really serious about Nortel become a strong enterprise player AND wants Nortel to gain its status as a tier one supplier, it may have to do something as dramatic as some of its peers (e.g. Lucent, Alcatel, Siemens, Nokia). The last time Nortel made a multi-billion dollar enteprise acquisition, it bought Bay Networks in 1998 for $9.1-billion. For the most part, the deal was a disaster – not unlikey many of the deails that Nortel made during the telecom boom. For more, check out this New York Times story.
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