More: Nortel-Motorola

http://online.wsj.com/article/SB120269934296058155.html?mod=yahoo_hs&ru=yahoo

Nortel + Motorola wireless joint venture? I really hope it will work out as good as the Nortel-LG venture.

Mike Z has about the same ability to buy Moto as I do of buying a Bugatti Veyron. Not gonna happen.

More likely scenario: Moto buys NT, Mike Z is given a golden parachute (and then /he'll/ be able to buy a Bugatti Veyron), and in 1 - 2 years he'll pop up someplace else.

Mike Z would love to get Moto and also keep his job as uber-exec. It will stop him commuting from Chicago to Toronto on the corporate taxi jet, give him a bigger company, and also prove Moto was wrong when they snubbed him. It will also allow him to paper over his failure to date at Nortel.

Apple:
It's sad, but I tend to agree with you. Natural (market) causes. Someone could just pull the plug instead to cease the suffering. This should not be a surprise if it actually happens.
Where do I send the flowers?

2008 will be make of break for many of the companies mentioned: Nortel, Motorola, Alcatel/Lucent, Tellabs, Ciena. Its time to separate the men from the boys.

Clearly Nortel is in no position of buying Motorola. But what about the other companies like ZTE or Huawei buying Motorola? They could be also interested in their handset business.

ZTE is too small
It's $5bill rev company now and expected to be $7 bill in 2008
HW is $11 bill company now and almost sure $17 bill rev in 2008
/they have a huge backlog!/
In 2004-2007 ZTE and HW grew up 300% in the same time frame JNPR grew 100% and CSCO 60%. NT did not grow much, maybe single digit if we can accept murky accounting.
If I were to expect, MOT should acquire JNPR
It's too late for NT to do that. Market price reflects it, doesn't it?
Only $5 bill market cap now.I say, markets have spoken about NT future!
The sell of continues on any up tick day; the dumping continues on ignorant, not educated retailers.
So many good choices for MOT shareholders now as we speak! Handset div will be separated /Mike Z would be the best choice for handsets/
The rest can be merged easily with others including private Avaya.
NT is scheduled to die of natural causes, ala AirCanada story.

Uhh..I'm pretty sure Mike Z burned his bridges at Motorola. And remember he was head of the handset business. Did he truly turn it around or was it a flash in pan built on temporary numbers during a credit boom ? I'm beginning to believe Mike Z is not as successful as was portrayed back then (Mr. Fix It). Even if Motorola wanted to take over Nortel, the Canadian government wouldn't allow it.

Um, I'm not sure that Mike Z has the final vote. If Moto offered NT's long-suffering stockholders a good premium on NT's stock, they would sell in a heartbeat. They would be fools not to. When was the last time anyone made money on NT stock? (OK...if you bought it when it was at 50 cents, you're probably pretty happy. For the other 99% of NT's stockholders, they would probably be peeing all over themselves with excitement at the thought of being able to quickly exit with a 30%+ premium over the current price.) Run a trendline through NT's stock price over the last 6 mos...or 1 yr...or 2 yrs...or 5 yrs. Not a pretty picture.

Nortel would have been history years ago if the EDC had not provided them low interest loans financing of deals and wavers from paying them off whenever they get in trouble. I think *I* could have made more money than Nortel with them though :)

Google nortel and EDC for a peek

Can you please elaborate on this :

"the Canadian government would be reluctant to see given how much financial support it has poured into the country’s flagship high-tech company."

When/How much support has the govt provided to Nortel?

Almost half of EDC's $21 billion loan portfolio is to Nortel and Bombardier clients. EDC financing for Nortel sales is particularly important given the weak state of the telecom industry worldwide highlighted by the fact that Nortel's foreign buyers have not repaid $4.1 billion of its loans to them (Nortel lent this money between 1997 and 2000 to finance its sales).
======================
from a fragment down half a page

, Nortel has received considerable financial assistance from the Canadian government. During 2002-04, Export Development Canada (EDC), a Crown corporation, gave $130 million in total financing for nine different sales by Nortel of telecommunications equipment to Sercotel S.A. de C.V. in Colombia. Sercotel is owned by Mexico-based America Movil, the largest cell phone company in Latin America which has operations in ten countries. In 1996, EDC gave $65 million to support Nortel's sale of telecommunications equipment to the Colombia Telecommunications Funding Corporation. EDC has also financed about U.S.$90 million of Nortel's cellular business including $17.3 million for its supply of equipment to OCCEL in 1995.EDC support (and thus that of the Canadian taxpayer) is crucial to Nortel's ability to generate international sales. As one observer put it "Nortel Networks Corp. and Bombardier did not become multi-billion dollar global leaders just by making cutting edge products; they also helped many of their biggest customers to buy them using big loans from Export Development Canada." Almost half of EDC's $21 billion loan portfolio is to Nortel and Bombardier clients. EDC financing for Nortel sales is particularly important given the weak state of the telecom industry worldwide highlighted by the fact that Nortel's foreign buyers have not repaid $4.1 billion of its loans to them (Nortel lent this money between 1997 and 2000 to finance its sales). Cash-strapped foreign telecom companies are unlikely to buy Nortel products without EDC financing.Nortel and The Liquidation/Privatization of Colombia's TELECOMAs noted above, Nortel calls itself "a leader in the implementation of shared risk agreements in Colombia."
link
http://en.wikipedia.org/wiki/Talk:Nortel_Networks

Much like the French government has provided Alcatel with all kinds of financial support, the Canadian government has done the same for Nortel by offering R&D credits, a series of loan guarantees through EDC, etc. The government provides the same kind of support to companies such as Bombardier and Pratt & Whitney to keep jobs in Canada.

Innovation is an internal problem. Market critical mass is an external issue. Both need to be managed.

Moto management could solve the critical mass issue, and take some of the overcapacity out of the service provider market by buying NT. There are still too many equipment providers chasing carriers. Some of this capacity needs to be taken out. Seperately, both companies are too small too move markets. If Moto doesn't buy NT, both companies risk being easily marginalized from the top by Ericsson, ALU and NSN, and from the bottom by Huawei, ZTE, etc.

Moto needs to acquire NT, decide on its priority markets, focus and, yes, innovate.

Interestingly, Moto and NT do have some complimentary product portfolios, which could be made more complimentary by make some decisions, shedding some product lines and focusing on some key markets.

Don't get me wrong, Moto could buy NT and fail badly. I just tend to believe that the odds of failure are higher for both companies unless they can achieve some market critical mass. You can't shrink your way to greatness. Nortel doesn't have the means to acquire mass. Moto isn't big enough in its remaining business. There are the only option each other has.

First rule my mother told me, and it applies to business as well: "Two wrongs don't make a right". Moto and Nortel without Moto handsets are just a couple of old dogs with legacy businesses and plenty of overlap.

Very well put. And both companies share the same kind of problem...inability to support and nurture enough innovation.

If Moto were to spin-out instead of sell-off it's handset business, allowing it to run as an independent entity out of the reach of the LSS luddites, I imagine we'd see much better performance.

Hahahahah...you have it exactly backward.

Nortel is in no financial position to buy Moto. On the other hand, Moto has a good amount of cash on hand, and would have even more cash after a spin-off of the handset business. Relieved of the handset business distraction, Moto will need to increase its focus on the service provider and enterprise markets. The challenge for Moto in the service provider market is that it no longer has the market critical mass of ALU, NSN or Ericsson. It needs to bulk up to compete. Nortel is the only remaining merger opportunity to give Moto the size it needs. Moto buying NT would also put NT shareholders out of their misery.

That seems like a more reasonable scenario, although would Motorola be willing to take on Nortel after shedding itself of a problem child?