Sramana Mitra wonders about Nortel’s investment thesis…other than reducing costs.
“How the company gets turned around, is difficult to assess. There doesn’t seem to be any strategic guidance from the management, besides continued drastic cost-cutting. In contrast, at least 3Com (COMS) has an investment thesis, even though they have their own headaches with the government.”
It’s a legitimate question because it’s there doesn’t seem to be any core strategic goals. The corporate strategic mantra seems to be “hyperconnectivity” but what does that really mean? It that a strategy, a technology, a corporation vision?
More: Hugh Anderson has some thoughts about Nortel and its relevancy in today’s Financial Post.
I promise you I have nothing to do with Qualicomm and I am as frustrated with their IP nonsense as everyone else :) .
UMB Ultra Mobile Broadband or EV-Do rev C, was "next gen" for CDMA. 3GPP/3GPP2 has the ultimate goal for bringing UMTS and UMB together with LTE. (adopting OFDM/MIMO in the RAN...)
The problem with UMB evolution is that none of the carriers want it. When vz announced its intention to go to LTE, it put the final nail in the coffin, and UMB was DoA.
Vested Interest
Nortel_will_survive, you seem to know your stuff while I am not technical. Why is LTE going to be the 4G going forward over UMB? My understanding is that UMB is the 4G version of CDMA while LTE is 4G UMTS (I know that is a little over simplified).
Nortel_will_survive
To Vested Interest re: LTE v. UMB
It's almost like Blu-Ray v. HD-DVD. UMB is being driven by Qualcomm while LTE is being driven by many. Some a frustrated at Qualcomm and their Intellectual Property licensing fees. Notice that Nokia does not make CDMA phones for this reason.
People need to understand some of the fundamental market adoption principles behind WiMAX and LTE. They are not competing technologies and solutions. Both have their place depending on the customer and what they are going to sell to their customers.
Current Wireless Service Providers offering CDMA or GSM/UMTS services will most likely use LTE when they move to a 4G environment. It allows them to preserve their existing infrastructure in support of their traditional voice services. There is no compelling reason to move standard voice service to LTE, yet, LTE will be required for advanced data oriented services. Consumer device manufacturers will need to make dual-mode devices that support CDMA and LTE or GSM/UMTS and LTE for this to be effective. CDMA isn't dead. Many Wireless Service Providers will continue to increase their coverage tied to their total number of subscribers. They will also continue to deploy EV-DO and EV-DO Rev. A in support of data applications. Verizon is a perfect example of this as they retain their CDMA environment while doing trials on LTE as an add-on to their CDMA infrastructure for voice services.
WiMAX will likely be adopted by new Wireless Service Providers that are focused on delivering data services to consumers and businesses rather than having a voice centric service offering. It has already been proven that Voice over IP over WiMAX is possible. This means that a person can operate a soft IP phone on a Laptop equipped with WiMAX and participate in the corporate VoIP network as if they were in the office. Consider this in terms of a Police vehicle with a Laptop. They can receive voice and video feeds while enroute to a situation. A traveling worker can also stay connected with home office regardless of their location. This becomes a data service, not a voice service. Enterprises will drive much of the WiMAX adoption, not consumers.
Both WiMAX and LTE offer good solutions depending on the type of Wireless Service Provider and what they want to sell to their customers. It will be a mixed market for quite awhile.
Nortelhand
My self, I still like the Wimax story. OK the US is going to go LTE to contain cost for legacy reasons, can’t blame them one bit. But Wimax can really increase connectivity at a very reduced price per bit. There are a lot of places in the world, jam packed with people that are lacking good communications, virgin territory perfect for Wimax. Sure it is the developing world, but I assure you the developing world is a lot more developed than most people in the US think, 20 or 30 years ago that was not the case. The world is growing up fast, and there are a lot of opportunities to sell this into.
But it does depend on Nortel convincing clients they will be around in the next 5 years, they will not get out of the market they are selling into, and they don’t screw up the execution. If they can do this, Nortel has a chance.
Also Wimax devices need to be interoperable with LTE. Nothing sucks more when traveling that equipment does not work in a new country.
Vested Interest
Almost a year ago Nortel was making some history in being the first to demonstrate functional WiMAX, LTE and UMB solutions. What has happened to this? It looks like WiMAX will never find the market Mike Z suggested it could. LTE is the next generation of UMTS (a business that Nortel got out of months before the announcement) and UMB is the next gen CDMA (an area that provides Nortel with a disproportionate amount fo its revenue). It looks to me like WiMAX and UMTS/LTE have been poorly handled and we really haven't heard anything about UMB from Nortel in over a year.
Another Nortel Watcher
Yes, this is the most critical point. This is why Nortel stock is overpriced, even at current levels. NO CREDIBLE GROWTH STRATEGY. It's been obvious to anyone who has been paying attention for some time.
What’s Nortel’s Investment Thesis?
Sramana Mitra wonders about Nortel’s investment thesis…other than reducing costs.
“How the company gets turned around, is difficult to assess. There doesn’t seem to be any strategic guidance from the management, besides continued drastic cost-cutting. In contrast, at least 3Com (COMS) has an investment thesis, even though they have their own headaches with the government.”
It’s a legitimate question because it’s there doesn’t seem to be any core strategic goals. The corporate strategic mantra seems to be “hyperconnectivity” but what does that really mean? It that a strategy, a technology, a corporation vision?
More: Hugh Anderson has some thoughts about Nortel and its relevancy in today’s Financial Post.