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    What if Nortel Can’t Sell MEN?

    By Mark Evans | October 10, 2008

    Given the terrible state of global capital markets, it’s entirely possible that Nortel will not be able to find a buyer for its metro Ethernet network business unless it’s willing to accept a bargain-basement price.

    If MEN can’t be sold, then what?

    Does Nortel hang on until the M&A market improves so it can get a better price for MEN? Or does a non-MEN sale encourage Nortel’s senior executives to re-think a strategic move that caught many people by surprise?

    It has been interesting to see Nortel announce recently a string of 40G contracts and talk the talk about how its 100G technology is going to be needed by carriers. The question is whether this is just happy talk to fluff up MEN for a sale or a sign that the optical market is looking good as the demand for bandwidth grows?

    If I had to make a wild prediction, it would be that Nortel pulls MEN off the table, citing unattractive offers and a volatile global economy. The question will be then what other moves Nortel needs to make.

    If there was ever a time for Nortel’s senior executives to find a moment of strategic brilliance, now is it.

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      Maybe this will help the board to realize that their choices was really bad. Their are lack of both industry insight and industry relationships. I think they will not succeed if they always do this..
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      If there was ever a time for Nortel’s senior executives to find a moment of strategic brilliance, now it. is.
      ======
      re
      Mark
      Q2 reveled that customers stopped buying, NT reported 25% drop in new orders.
      We did not see any significant contract wins in Q3 else. We saw many signs customers replaced NT with Ericson, Huawei and others.
      There is no slow down for Huawei
      Huawei revenue in 2007 was bigger than NT!
      Huawei rev in 2008 will be $18 bill
      ZTE grows 45% yoy too. ZTE will be bigger than NT this year.
      CSCO, the giant, grows double digit YoY.
      on top of that You have just posted another blow to Nortel; Telus and BCE abandoned NT!
      Customers exodus must be compared to the Domino effect started by
      Sprint, Verizon.
      Customers lost confidence in Nortel under current management with Mike Z as the leader! I can see that with a naked eye! Mike should resigned long time before that, to answer customers' demand.
      CEO, Mike Z, in summary: lack of vision and execution suitable for telecom company. Green CEO risking his carrier and failing on many occasions!
      The perfect storm with full strength has started and broken ship /never fixed/ at the open sea!
      I say, keep the music going until the last moment!
      Use ch11 and save some jobs.
      in conclusion
      from customer point of view
      Nortel is pulling the carpet from under customer in all divisions, one after another /UMTS, WiMax, MEN, LTE../
      from investor perspective
      There was never, never!, worse stock than NT
      from $1200 adjusted to current $1.60 with loss of $400 bill in the market cap!
      from employee perspective
      66 k jobs lost in last years and the restructuring is going into turbulence now.
      Public expectations
      Start cleaning the mess! Start criminal trials! Stop fooling everyone at once_right now /new investors, customers, employees/
      Bring back confidence to North American stock market!
      Now is the perfect time!
      Monetize all you can and protect brains of Nortel /R&D/
      Transplant the brains into a healthy body! /Brain donation anyone?/
      If you cannot satisfy everyone /investors, employees customers/ do just one thing Right. Public will accept BK with ease_easily.
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      By Mark Evans | October 10, 2008
      There is no slow down for Huawei
      Huawei revenue in 2007 was bigger than NT!
      Huawei rev in 2008 will be $18 bill
      ZTE grows 45% yoy too. ZTE will be bigger than NT this year.
      CSCO, the giant, grows double digit YoY.
      on top of that You have just posted another blow to Nortel; Telus and BCE abandoned NT!
      =====
      when was it posted?
      | October 10, 2008?
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      Public expectations
      Start cleaning the mess! Start criminal trials! Stop fooling everyone at once_right now /new investors, customers, employees/
      Bring back confidence to North American stock market!
      Now is the perfect time!
      Monetize all you can
      =============
      re
      when did I write that?
      Oct 2008!
      Monetize assets!
      Monetize assets!
      Monetize assets!
      That's what it is.
      No restructuring Plan after 6 months!
      Did some one post that Nortel wants more time to write the Restructuring Plan?
      Did I hear July 30?
      It's a joke, isn't it?
      There is $2 Bill in cash to grab!
      It's not a joke!
      Nortel has about $2 bill in cash left, right?
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      Let's talk about ZTE
      in 2008 ZTE reported $6.5 Bill in rev
      I don't know why but I was thinking about $8.5 bill
      Huawei reported $18.3 Bill for 2008

      Huawei will be $23 Bill in 2009!
      It's 4x bigger number than current ZTE rev
      http://www.lightreading.com/document.asp?doc_id...
      Huawei was bigger than Nortel in 2007 with $12.8 Bill in revenue!
      ihttp://www.huawei.com/corporate_information/annual_report/annual_report_2008/fve_year_summary.do
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      "If there was ever a time for Nortel’s senior executives to find a moment of strategic brilliance, now is it." -- given the recent history, safe to say NT as we have known it is a goner. It's a shame. The GE boys only had to do one or two things right to have made NT relevant, instead they focused exclusively on applying quality assurance to internal processes that ultimately had no value to customers -- terrific at doing the wrong things faster & better -- and now this same brain trust is left to figure out how to keep it from turning into a complete massacre for all the stake holders. GRIM!!
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      Two (2) biggest cheerleaders ?

      Scotia Capital, Gus Papageorgiou, 416-863-7552 ($34 target as of September 11, 2007)

      TD Newcrest, Chris Umiastowski, 416-983-3599 ($28 target as of November 7, 2007)
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      Wow.. it is interesting Huawei and Siemens.. I wonder if Nortel will partner for LTE with Huawei now.

      http://bce.ca/en/news/releases/bm/2008/10/10/74...
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      WOWWWW. Interesting article indeed......
      Isn't Bell Canada based out of Montreal Canada?
      Is Philippe Morin based out of Montreal Canada?
      I wonder why Mike Z. is EXPLOREING the sale of the MEN division.....
      He also did stress restructuring will be in order.....
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      Its over now ... BCE and TELUS just announced the next gen wireless network they are joining up on to build. The winners are Huawei and Siemens. Pretty sad really...Nortel the candadian company .. loses out to China and Germany .. in its own backyard.. sell now of forever hold your peace.. this is a sad day indeed :(
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      Remember when the Canadian government awarded its IT software license contract to Microsoft Office instead of local boy Corel and its Word[im]Perfect suite? Sounds like another vote of no confidence, and look where Corel is [isn't] today...
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      massive discounting by Huawei. the main benefit will be for Rogers as frustrated customers will move over. Huawei has crap products, unstable software releases, hopeless tech support. only good thing it has is price. good luck running a network over their products.

      wonder what the Gov of Canada will do when their information goes over a Chinese infrastructure, which has been known to be a security risk by other countries. The US Feds do not even think about going over Huawei let alone touching their equipment.
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      exnt - both BCE and Telus have rigorous validation processes. It may be true that Huawei will be tested to quality, but neither BCE nor Telus will turn up a service until it's ready. Huawei stands to benefit a lot from this deployment.

      Also, Huawei was selected to lower prices for the majority supplier. It's almost standard process to throw the low-baller a piece of the business.
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      Or look at it from another angle. Would you buy a Kia if Kia were on the brink of bankruptcy?
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      Note that the North American sales president for Nokia-Siemens Networks is Susan Spradley - former Nortel president. The power of the rolodex backed by an adequate portfolio prevails.

      Perhaps this will help the board understand just how bad their hiring choices have been. Their GEniuses lack both industry insight and industry relationships. How could anyone possibly think they would succeed?
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      tough to sell in this current environment. very tough. some players like Huawei will not even be allowed to pick up the business.

      this could not have come at a worse time. I am surprised they announced it and have not announced a buyer in a month or even confirm talks with potential parties. My 2 cents is 'lots of interes' is just calls coming in and 'interested' parties have left the table now to focus on their own business. Nortel stock has dropped more than 50% so in a declining market, I would wait till the opportunity becomes even more attractive. i.e. Nortel becomes extremely desperate, valuation has gone below $1 billion.

      This will happen as customers move away from Nortel optical, cash burn makes it difficult and creditors come calling.

      At this point they should file chapter 11, restructure under bankruptcy, sell off long term debt, reduce facilities etc. this is the right time to do it since capital spending will be all time low so its not that carriers or enterprise are signing major deals anytime soon.
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      If I were in Z's shoes and could not sell MEN, then I would go ahead and spin this out anyways, creating a separate company fully owned by Nortel. There are many advantages to doing this including retaining the customer base thats making the exodus due to uncertainity. This assumes the other business units are critical to growth.

      Another option is to dump the wireless business because only CDMA is left. Either sell to Ericsson, Nokia or fold it into LG. MEN and Enterprise would be the two key units left.

      Enterprise I think has value and there could potentially be a bidding war for it between Microsoft, IBM and HP. Nortel goes back to its roots of being a carrier compnay only.
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      If they can't sell MEN in addition to growing problems for their wireless business, Bell and Telus will overlay their NT CDMA network with Nokia-Seimens and Huawei HSPA network - a bid NT could not make after selling its UMTS business to Alcatel, leaves Nortel in an increasingly dire situation. The value proposition of the wireless business as a spin-off becomes more difficult as competitors start displacing Nortel in the North America without the need to buy the Nortel product line. MEN continues to be a high growth but marginal, earnings-wise, play that has a large number of competitors. And it can be much easier to change optical gear vendors than wireless vendors.
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      If Nortel can't sell the MEN unit for a respectable amount,then they should hold onto it for the time being until there is a little more clarity in the credit markets.

      Nortel's losses in their MEN business all of last year were $15 million on $1.5 b revenue,although not profitable neither is it a serious cash drain on the company's balance sheet,so they could hold it for another 6 months as the losses would most likely be manageable at worst.Seeing that this division is the most likely to experience strong growth,I would expect sales in this division to help prevent any significant losses over the next 6 months,affording Nortel to await a decent offer .
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      it's not that they can't keep it because of units losses.
      it's that they need to sell SOMETHING ASAP to get cash.
      they picked MEN because it was the only unit that they felt they could find a buyer for, not because MEN was losing money and had to be sold to stop the bleeding.
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      Bravo Mr Real

      This blog will get more integrity when people actually know what they're talking about, not when people stop using the word "monkey".

      I'm sure others will also appreciate this effort as well.
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      Nortel is coming to the end of the road as publicly traded company attempting to sell a myriad of products and services across the internetworking & telco market spaces.

      Followers of the company should now realize the fortunes of the different parts of the company and the company's shareholders have diverged. The share holders equity has evaporated and will never return - and there is nothing that the BOD or the Exec Management Team can do to change this fact. The BOD and the exec management eam are faced with the challenge of what do the pieces of Nortel look like 18 months from now - and how does the transformation occur. Nortel is facing bankruptcy and dismemberment or a bargain basement private equity bail out and dismemberment. The key issue is whether the BOD and the Exec management team faces this challenge proactively or simply sticks its head in the sand - as it is doing now. The current attempt to sell MEN shows a BOD and exec management team that is both incompetent and oblivious (to its real standing in its market space).

      This means that things are going to get even uglier for the different business groups within Nortel and its employees.
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      not only it is entirely possible, but it is also very probably nortel won't be able to find a buyer for men. i think the reason they made a public announcement about selling men was because they couldn't find a buyer trying to strike a deal privately, and did so out of desperation.
      if the nortel execs weren't monkeys just running around assaulting women, they'd know making a public announcement like this would have resulted in stock prices of today. for them to do so despite the risk of nt turning into penny stock definitely tells me they got absolutely no other moves
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      You know, your credibility is seriously downgraded when you make such extreme statements as the one above about "monkeys assaulting women". Yeah, one exec doing a terrible thing doesn't equate to the entire leadership team being a bunch of monkeys.
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      Notafan,

      Tired's right. I appreciate your enthusiasm but try to keep your comments constructive and respectful. I am moderating comments more actively just so you know.
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      Tired's right. I appreciate your enthusiasm but try to keep your comments constructive and respectful. I am moderating comments more actively just so you know.

      Bravo Mark

      Not to mention that it will give your blog more integrity.

      I'm sure others will also appreciate this effort as well.
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      one guy downgrades me and everyone jumps on the wagon to kick me when i'm down? is this how it works in nortelland, or is this just a cruel world?

      what amazes me is that the three people are the ones that i showed how jokes, numbers and accounting work. i "respectfully" find it comedic that you've all been seeking revenge in your own little ways.
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      notafan,

      maybe lighthearted in your view but by saying execs you mean all of them are guilty of doing something they did not. there are people who are still upset at Hackney, and rightly so, but its only this individual not the rest.

      it would be equally wrong for someone to go and say things to generalize all the people on allaboutnortel.
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      While it would certainly be absurd to call all execs monkeys and/or suggest that they all run around and do what one of them did, it is important to point out that whoever did what he did wasn't FIRED AS HE SHOULD HAVE BEEN, ON THE SPOT!!!
      So to a certain extent, the argument could be made that JUDGEMENT that the top management has shows is at best questionable. Although this was clearly an isolated event and should not be projected to other managers of NT PERSONALLY, the fact that SENIOR MANAGEMENT showed that this type of behaviour is not going to get you fired on the spot reflects on the entire company.
      So MANAGERS are not a bunch of monkeys, but MANAGEMENT is another story.
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      I have to agree. I think it's a disgrace that MZ didn't fire Hackney for cause when he assaulted a young woman. It sends a message about MZ's values and it it has been a continuing PR liability, as evidenced by this post and the others that reference this issue.
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      Sometimes you have to just say business is business and you may have to fire your best friend even if you believe he has done nothing wrong if this is good for the company and its shareholders.
      Business is business.
      Family and friends are family and friends. If I have to fire my best friend in a situation like this, I'm sure he or she would understand, eventually. Those folks didn't get up there where they are without developing an understanding for "business is business" concept, or DID THEY???
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      Talk about Mr. Unreal.
      The NT culture..and the culture anywhere else where people works is completely contrary to your way of thinking. Best Friends Don't fire Best Friends. They promote them, move them around, give them a heads up or whatever else they can do..if they are true friends. That is the way of the world, especially in the executive ranks. Wake up man. The guys who think business is business and knife their best friends are the ebeneezer scrooges of the world and thankfully there isn't alot of them around.
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      notafan,

      It's not revenge but adhering to a certain standard of behavior. To be clear, I'm not singling you out.

      Mark
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      Not revenge on my part. I am guilty of some personal attacks on this board, and I agree that you've helped me try to see humour in some of the bad news. I just thought maybe you went a little far in your comment. It's not a personal attack against you, I promise.
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      Mark,

      Very well put "Moment of strategic brilliance", Nortel needs it bad. I fell the same way, MEN will be a hard sell for the near term.
     
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