Morin on MEN

By Mark Evans | Published: September 25, 2008

Phillipe Morin, who heads up Nortel’s Metro Ethernet Network business, sure has a funny of way of playing M&A poker.

A week after Nortel unveiled plans to sell the $1.5-billion business, Morin told the Globe & Mail that the announcement has prompted more potential buyers to come out of the woodwork. Strange.

And now, in an interview with Jim Duffy of NetworkWorld, Morin proclaims the sale of MEN is part of Nortel’s strategic shift to become more of a software-driven business.

“Nortel is really stating that it’s now going to focus on more of an application services focus — what we basically call ICT,” he told Duffy. “When you look at MEN… it’s addressing a unique market – different from all of the other businesses at Nortel – and it’s a market that requires consolidation.”

Morin goes on to say the MEN business has “way too many players” and that “Everybody’s staring at each other saying, ‘Who’s going to pull out?’ We’ve been on that sort of path for the last three years.”

While Nortel plans to get out of the business business it’s too crowded, Duffy points out the Ethernet carrier switch market is also booming. While there are more than 20 suppliers making carrier Ethernet switches, Duffy writes the $4.6-billion market growing at a compounded annual rate of 42.5%.

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  • Wolverine

    Why is it odd that more prospective buyers might emerge when the possible sale became public?

  • broadbandbill

    Nortel – a software company, of course. Given that the world-classers have such long and successful history running software companies this makes perfect sense. And just look at the qualifications of their CTO; never mind that he has only worked for one box company previously; in his spare time he worked as a software architect in his basement building the software required to boost hyper-connectivity, I am sure. Watch out Microsoft, your days are numbered. — bb

  • exnt

    bill, you forgot to mention that Roese also invented the Internet, not Al Gore.

  • http://blogs.nortel.com/buzzboard Bo Gowan

    Just to clarify your last paragraph – that's the carrier Ethernet switch market (I see you detail that in the next sentence…just want to be clear). Other industry articles have generalized Nortel exiting the “Ethernet business”, which could be misconstrued to include Enterprise Ethernet.

    Also, Z and others have said for a while that the global is to focus Nortel more on software and services (e.g. unified communications, SOA, etc). Selling MEN obviously does that…not sure how Morin's comment is out of place with that stated goal.

  • Novice Investor

    Wow …. what a ride …. time for IBM, Motorola, Microsoft, Alcatel-Lucent, Cisco, Huawei, etc to snap up Nortel, clean out Michael Z (Mr. Fix it ?) and his boys and their big $$. Just give me a little bit of stock back so my Great Great Grandchildren can break even …. maybe I should go out a few more generations.

  • jayemmay

    Nortel's MEN business has been estimated as 1.5 billion dollars in 2007. That is the figure that is used in discussing the sale of Nortel's MEN.

    Now Bo Gowan reminds people that MEN has two components: Enterprise Ethernet and Carrier Ethernet. He also says the planned sale is only of Carrier Ethernet.

    So what was the 2007 level of business for Carrier Ethernet? I would also ask this: How does keeping part of MEN move Nortel into the software business?

    jayemmay

  • broadbandbill

    Bo,

    Morin’s comment would NOT be out of line if the announcement coincided with ‘Nortel’s new focus stated a while ago’. Call it what you will, but we all know that there was a level of utter stubbornness by the powers to be to retain every division of Nortel in light of extreme evidence to the contrary. Now, it’s a fire sale and your time spent in numerous meetings to ‘position’ it as something other than what it is yet more evidence you guys are just wasting more valuable time. You are not that smart and we are not that dumb! –bb

  • broadbandbill

    …and the Klingon's cloaking device…–bb

  • http://blogs.nortel.com/buzzboard Bo Gowan

    That's not what I said (or meant to say)…

    MEN consists of optical (photonics) and *Carrier* Ethernet.

    Enterprise Ethernet is part of the Enterprise business. The point was that other industry articles (not AAN) have generalized that we are getting out of the “Ethernet” business. Ethernet spans a lot of possible areas, and spans multiple Nortel business units. Nortel has no intention of getting out of the “Enterprise side” of the Ethernet business.

  • exnt2

    hey Bo er! get your act together. Enterprise Ethernet you nuts. The carrier ethernet platform is the same at Nortel. They created this whole PBT story on it. Enterprise is cloning it. So there is no difference.

    I am amazed Morin says way too many players for 3 years. yes its true but he convinced Z to make a whole new division as he sold a story that it was growing, market was exploding yadda yadda yadda. in reality nothing significant. Nortel lost optical share. it only leads in wdm which is a tiny percentage of the entire optical market.

    I shudder to think of application services focus. this is coming from Roeses new vision for Nortel to become a Microsoft, HP or an IBM. I guess thats very crowded with companies staring at each other and gorillas like Cisco getting in.

    Why acquire legacy ethernet technology from Nortel when small players like Extreme, Ciena, Tellabs can all be snapped up to get the same type of portfolio. As things slow down their valuations will fall making them attractive buys.

  • copper_athlon

    <<”Nortel is really stating that it's now going to focus on more of an application services focus — what we basically call ICT,” or Information, Communication and Technology, Morin says.>>

    It sounds to me like IBM or MSFT is going to snap NT up after MEN is sold. This is what I think: NT will use MEN money to buyback its stocks. That will get NT stock price up to about $10 to $15 then either IBM or MSFT will buy Nortel with 30 percent of premium. IMO.

  • europe

    .. btw…hyperconnectivity 2.0 will work even when being cloaked …

  • http://blogs.nortel.com/buzzboard Bo Gowan

    Not true exnt2. While our Carrier Ethernet and Enterprise Ethernet products share some hardware, the software on the two platforms is very different — for the purposes of targeting carrier versus enterprise needs.

  • Clint

    Metro Next based out of Ottawa is not remotely connected with anything on the enterprise ethernet side. It is Carrier Ethernet and has no market.

  • Clint

    You are dreaming.
    If IBM or MSFT bought NT they will only do so once there are around 6,000 employees left. Mostly managers, executives, Mike Z and sales managers left in the clique and software personnel. By then NT might not exist. Anything IBM or MSFT buy will immediately be moved overseas to some cheap labour software market. Probably India.

  • broadbandbill

    Nortel – a software company? Look at your DNA gents, it ASIC-based as is your business model and distribution channels–bb

  • NT_still_there

    The company executives will still get millions in bonuses while the board is dozing off. If you want to turn this company around then fire the management team, executives and the board. Ah yes the stock prices, well, its very high with these underperforming, incompetent, selfish jokers in charge. Selling MEN is a brilliant idea of killing this company faster.

  • broadbandbill

    Nortel – a software company? Look at your DNA gents, it ASIC-based as is your business model and distribution channels–bb

  • NT_still_there

    The company executives will still get millions in bonuses while the board is dozing off. If you want to turn this company around then fire the management team, executives and the board. Ah yes the stock prices, well, its very high with these underperforming, incompetent, selfish jokers in charge. Selling MEN is a brilliant idea of killing this company faster.

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