Comments on: Is Breaking Hard to Do http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/ All the News about Nortel Networks Thu, 09 Feb 2012 03:34:00 +0000 hourly 1 By: exnt2 http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-32021 exnt2 Wed, 24 Sep 2008 18:08:23 +0000 http://www.allaboutnortel.com/?p=1338#comment-32021 why would anyone care? nortel burned its bridges when it started the rhetoric that it will change from Canadian to American when the dollar was 0.50c US and corporate taxes were high in the 90's. why would anyone care? nortel burned its bridges when it started the rhetoric that it will change from Canadian to American when the dollar was 0.50c US and corporate taxes were high in the 90's.

]]> By: exnt2 http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4486 exnt2 Wed, 24 Sep 2008 14:08:23 +0000 http://www.allaboutnortel.com/?p=1338#comment-4486 why would anyone care? nortel burned its bridges when it started the rhetoric that it will change from Canadian to American when the dollar was 0.50c US and corporate taxes were high in the 90's. why would anyone care? nortel burned its bridges when it started the rhetoric that it will change from Canadian to American when the dollar was 0.50c US and corporate taxes were high in the 90's.

]]> By: copper_athlon http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4487 copper_athlon Wed, 24 Sep 2008 02:46:51 +0000 http://www.allaboutnortel.com/?p=1338#comment-4487 Mark,<br>What do you mean "Will the Canadian government let Nortel"? I had heard that few years ago. But last three years NT stock price dropped from $30+ to under $3 today and I haven't heard any words from Canadian government. I thought NT has been forgoten from Canadian government already. That is understandable. When NT was $200+ billion company, there were a lot of cheers and a lot of promises. Now NT is less than $2 billion company, they may not pick up the phone when you call. Mark,
What do you mean “Will the Canadian government let Nortel”? I had heard that few years ago. But last three years NT stock price dropped from $30+ to under $3 today and I haven't heard any words from Canadian government. I thought NT has been forgoten from Canadian government already. That is understandable. When NT was $200+ billion company, there were a lot of cheers and a lot of promises. Now NT is less than $2 billion company, they may not pick up the phone when you call.

]]> By: broadbandbill http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4488 broadbandbill Fri, 19 Sep 2008 04:40:08 +0000 http://www.allaboutnortel.com/?p=1338#comment-4488 “There is no substitute for experience” – Lou Holtz, former Head Football Coach, University of Notre Dame.<br><br>The very FIRST thing Mr. Z was advised on was to have a friendly chat w/Gary Daichendt just to pick his brain and get his insights into what (didn’t) happen during Mr. Daichendt very short tenure at Nortel, which Mr. Z ignored. <br><br>The second thing that happened was the McKinsey suits setting up shop in Toronto. The rest is only a painful reminder of what happens to those that are not willing to engage experience. <br><br>“Those that do not learn from history are condemned to repeat it!” George Santayana.<br><br>-- bb “There is no substitute for experience” – Lou Holtz, former Head Football Coach, University of Notre Dame.

The very FIRST thing Mr. Z was advised on was to have a friendly chat w/Gary Daichendt just to pick his brain and get his insights into what (didn’t) happen during Mr. Daichendt very short tenure at Nortel, which Mr. Z ignored.

The second thing that happened was the McKinsey suits setting up shop in Toronto. The rest is only a painful reminder of what happens to those that are not willing to engage experience.

“Those that do not learn from history are condemned to repeat it!” George Santayana.

– bb

]]> By: ex-Nortel http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4489 ex-Nortel Thu, 18 Sep 2008 23:35:04 +0000 http://www.allaboutnortel.com/?p=1338#comment-4489 For the past 2 years, I have been stating that Nortel has the wrong business model and strategy, lacks the right management team, products, & funding to implement a breadth and depth strategy, and that any fundamental analysis of Nortel demonstrates that the company is trapped in a downward spiral from a revenue, profit, product, market share, and stock price perspective. Now I have been proven right and the company is finally looking at meaningfully downsizing to a core set of businesses and selling off assets and businesses. <br><br>Unfortunately, this move comes to late. Nortel will attempt to sell assets and businesses in a down business environment with a very severely limited number of potential buyers.<br><br>The fundamentals are going to get worse - this will begin to look like a study in the "Chaos Theory". Nortel's business will continue to deteriorate while attempting to sell anything of value in a market with few buyers (who hold all the cards). As the Lehman Bros situation shows, it is far better for a buyer to buy assets in a bankruptcy situation. And of course, another quarter of cash burn will make Nortel even more desperate. So Nortel will probably sell its best business in a manner in that will guarantee that Nortel will get a terrible price for the asset.<br><br>Nortel really misses the 2 Garys now. Their business plan would have spared the Nortel shares holders all of this agony. But Bill Owens and the BOD just knew better. Press releases and money losing deals in India do not build a company or protect its employees. Why worry about funding money losing businesses when you are secretly negotiating an exit package?<br><br>The stock remains a sell although any drastic dip will force shorts to cover and drive up the stock price in a nice short term move up. Then the selling should be again. This will continue to happen until NOrtel's break up or bankruptcy. For the past 2 years, I have been stating that Nortel has the wrong business model and strategy, lacks the right management team, products, & funding to implement a breadth and depth strategy, and that any fundamental analysis of Nortel demonstrates that the company is trapped in a downward spiral from a revenue, profit, product, market share, and stock price perspective. Now I have been proven right and the company is finally looking at meaningfully downsizing to a core set of businesses and selling off assets and businesses.

Unfortunately, this move comes to late. Nortel will attempt to sell assets and businesses in a down business environment with a very severely limited number of potential buyers.

The fundamentals are going to get worse – this will begin to look like a study in the “Chaos Theory”. Nortel's business will continue to deteriorate while attempting to sell anything of value in a market with few buyers (who hold all the cards). As the Lehman Bros situation shows, it is far better for a buyer to buy assets in a bankruptcy situation. And of course, another quarter of cash burn will make Nortel even more desperate. So Nortel will probably sell its best business in a manner in that will guarantee that Nortel will get a terrible price for the asset.

Nortel really misses the 2 Garys now. Their business plan would have spared the Nortel shares holders all of this agony. But Bill Owens and the BOD just knew better. Press releases and money losing deals in India do not build a company or protect its employees. Why worry about funding money losing businesses when you are secretly negotiating an exit package?

The stock remains a sell although any drastic dip will force shorts to cover and drive up the stock price in a nice short term move up. Then the selling should be again. This will continue to happen until NOrtel's break up or bankruptcy.

]]> By: exnt http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4490 exnt Thu, 18 Sep 2008 21:17:24 +0000 http://www.allaboutnortel.com/?p=1338#comment-4490 Timur is right, Mike decided to concentrate on execution of current strategy: being a full line telecom supplier. However, this strategy was flawed and all the old Nortel execs (except Richard Lowe) were telling him this. The Garys also knew this - Nortel could not compete across the board. But Mike Z only listens to people who love Mike Z, which are all his new hires like Hackney, and they agreed with Mike, since they love Mike and Mike is always right. So the circle of yes-men leads us back to a failed strategy which has crippled Nortel. Timur is right, Mike decided to concentrate on execution of current strategy: being a full line telecom supplier. However, this strategy was flawed and all the old Nortel execs (except Richard Lowe) were telling him this. The Garys also knew this – Nortel could not compete across the board. But Mike Z only listens to people who love Mike Z, which are all his new hires like Hackney, and they agreed with Mike, since they love Mike and Mike is always right. So the circle of yes-men leads us back to a failed strategy which has crippled Nortel.

]]> By: Timur http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4491 Timur Thu, 18 Sep 2008 20:48:55 +0000 http://www.allaboutnortel.com/?p=1338#comment-4491 This shows that Zman's strategy for almost the past 3 years has been totally flawed. A bad strategy with great execution will give a crap result. Zman should have come in 3 years ago and sold off as much of the carrier business as possible to focus on enterprise. Now it is too late. This shows that Zman's strategy for almost the past 3 years has been totally flawed. A bad strategy with great execution will give a crap result. Zman should have come in 3 years ago and sold off as much of the carrier business as possible to focus on enterprise. Now it is too late.

]]> By: straighttalk espresso http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4492 straighttalk espresso Thu, 18 Sep 2008 19:51:54 +0000 http://www.allaboutnortel.com/?p=1338#comment-4492 In hindsight selling MEN makes sense. Cashflow is negative so in this environment something drastic had to be done in order to stave off bankruptcy. The future vision for NT is as a Enterprise player and Mike Z and his closest lieutenants recognise that Enterprise represents the best hope for Nortel long-term. So that division is not going to be sold (unless the whole company goes..).<br>Which leaves Wireless, Carrier Wireline and MEN. <br>Strategically, selling Wireless makes most sense. Unfortunately its the only part of the company making real money and although it;s declining fast, CDMA is effectively subsidising the rest of the business.. So selling Wireless would render the rest of the company dead on it's feet.<br>So that leaves Wireline and MEN. Wireline would be very messy to divest and besides ...who would possibly want to buy it? (and go head to head with the Huawei?). MEN represents a juicy technology and tidy business. While its not profitable for Nortel it could easily be very profitable for a player with the right operations scale. And selling it is the only option for Nortel to take in badly needed cash without killing the whole company. As others have noted, this isn't about strategy, it's about survival. In hindsight selling MEN makes sense. Cashflow is negative so in this environment something drastic had to be done in order to stave off bankruptcy. The future vision for NT is as a Enterprise player and Mike Z and his closest lieutenants recognise that Enterprise represents the best hope for Nortel long-term. So that division is not going to be sold (unless the whole company goes..).
Which leaves Wireless, Carrier Wireline and MEN.
Strategically, selling Wireless makes most sense. Unfortunately its the only part of the company making real money and although it;s declining fast, CDMA is effectively subsidising the rest of the business.. So selling Wireless would render the rest of the company dead on it's feet.
So that leaves Wireline and MEN. Wireline would be very messy to divest and besides …who would possibly want to buy it? (and go head to head with the Huawei?). MEN represents a juicy technology and tidy business. While its not profitable for Nortel it could easily be very profitable for a player with the right operations scale. And selling it is the only option for Nortel to take in badly needed cash without killing the whole company. As others have noted, this isn't about strategy, it's about survival.

]]> By: more http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4499 more Thu, 18 Sep 2008 19:35:24 +0000 http://www.allaboutnortel.com/?p=1338#comment-4499 There _will_ be a buyer. The way Nortel can find a buyer is to adjust the price according to market conditions. I guarantee you that if Nortel put MEN up for sale for $1, it would find a buyer. Guaranteed. The bigger question will be if the selling price ultimately represents good value for the money. There _will_ be a buyer. The way Nortel can find a buyer is to adjust the price according to market conditions. I guarantee you that if Nortel put MEN up for sale for $1, it would find a buyer. Guaranteed. The bigger question will be if the selling price ultimately represents good value for the money.

]]> By: Mark Evans http://www.allaboutnortel.com/2008/09/18/is-breaking-hard-to-do/comment-page-1/#comment-4494 Mark Evans Thu, 18 Sep 2008 19:17:48 +0000 http://www.allaboutnortel.com/?p=1338#comment-4494 You're right but...MEN's "Management OM" increased to $17M in Q2 from $10M in Q2 2007, Meanwhile, MEN's gross profit increased from $139M to $143M in Q2, while gross margin remained flat. You're right but…MEN's “Management OM” increased to $17M in Q2 from $10M in Q2 2007, Meanwhile, MEN's gross profit increased from $139M to $143M in Q2, while gross margin remained flat.

]]>