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“Challenging” = Tough Times
By Mark Evans | August 1, 2008
As soon as Mike Z. used the word “challenging” this morning to describe Nortel’s outlook, you knew investors were going to pound NT today. With the stock down 15% in late-morning trading, any optimism about Nortel’s prospects has evaporated.
Nortel’s challenges are four-fold: a portfolio without a hot-selling product; fierce competition; the continued decline of its cash-cow CDMA business; and a tough economic climate.
In other words, it’s the perfect storm.
Meanwhile, Captain Mike is doing the best he can to navigate turbulent waters by casting unneeded costs, people and business units off the the good ship S.S. Nortel. It’s not an easy job but he knew the assignment when he took the helm nearly three years ago.
The problem is that many things facing Nortel are beyond its control. Even if Mike Z. made all the rights decisions, it might not matter much given the current landscape.
Mike Z. is scrambling to make Nortel a leaner, more focuse and profitable entity. But it may be that what he’s really doing is preparing Nortel for a deal - be it a merger or its sale.
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