So, What’s Next for Nortel?

Duncan Stewart, president of Duncan Stewart Asset Management in Toronto, said he expects Nortel will trim between 10 and 15 percent of staff — or roughly 3,000 to 5,000 people — not counting a sale of Metro Ethernet.
“They're still way out in the wilderness,” he said. “It's almost impossible to cut your way to growth.”
He, too, said that large layoffs send troubling signals to the remaining employees, as well as customers and competitors.
“It's part of what we call the sort of death spiral of continued cuts,” he said.

While Nortel needs to rein in its cost base, it is also limited in the number of workers it can cut at one time, said Ed Snyder, principal analyst at Charter Equity Research.
“You run into structural issues when you cut off too many people at once,” he said. “It causes a huge disruption.”
Morale suffers and remaining employees could start looking for work elsewhere.

Unfortunately it is time to start witting Nortel's eulogy
Nortel: 1895 – 2009

One day we'll write the memories, today those are so fresh that it hurts too much to write all the details of what has transpired in these past 3 years

Nortel have consistenly got BIG strategic bets woefully wrong (both externally as a business and internally in supporting the business), and this continues …
– Its hard to encourage customers to embrace your 4G wireless programme – when you have discontinued operations in its predecessors. Customers expect to see an evolution path – somthing thats oblivious to Nortel …
– PBT ONLY became telecomms new because of BT, and the possibility they 'might' deploy in 21CN (due to cost constraints)…. Well they have since indicated they will not, and that leaves PBT in the desk drawer it was found (-lets face it it was left in the 'drawer' as in the 'any-to-any' IP world, PBT owed more to the environment Nortel was trying to move away from …)
– Nortel have now (I believe) ceased R&D in WiMax preferring instead LTE (this should come as no surprise to 'neutral' observers – but obviously in Nortel the clock 'ticks' differently)
– Nortel held on frantically to the 'ATM philosophy' when school kids knew the future was IP. Having finally 'embraced' the IP world can someone/anyone point me to a carrier garde router, used by ANY Tier-1 (maybe even Tier 2) service provider that has a Nortel brandname??
– Nortel's position in UC is very perilous ….. Voice is totally commoditised. Why commit to a vendor who obviously will not be around in 5 years? What other compeeling value proposition does Nortel bring to the table with UC??

Its sad but Nortel is now an irrelevant foot-note. The only value Nortel will contribute in future is in MBA discussions in how NOT to run a business ….. Nortels decline has been occuring for the best part of TEN years (a point not frequently highlighted) ….. I would point to Nortel's culture as the one really obvious reason why they have never prospered ….. The culture thar saw Nortel making numerous totally irrelevant acquisitions (you'll never hear Tony R address that question, but to read his posts you would think Nortel invented IP!)…….

Nortel requires a complete makeover – no intrusion from any Government …. It needs to identify a niche that it can compete in, and totally focus in that area …. I have grave concerns as to whether its decision to focus in enterprise space is the right one … Nortel built its brandname with service providers, and I would have thought focusing on that segment would have – at least – kept its brand-name in-tact? What has Nortel EVER offered the enterprise space, and more importantly what CAN it offer moving forward that will keep its business alive???
The one other factor that goes unmentioned in the Nortel dicussion:
Considering their incredibly low market cap, is it not a point of concern that no-one is prepared to buy this ailing business? It appears to me that too many potential buyers have deemed Nortel a liability ….

I agree that Nortel needs to make some tough choices for it's future direction and addressable markets. However, I disagree that it is an Enterprise v. Carrier decision as that locks them to a customer segment rather than a solution segment.

One of their most lucrative solution segments is Voice, where they have delivered hundreds of millions of ports across both Carrier and Enterprise. The lifecycle for voice is a 3 part transition that evolves voice platforms to IP Telephony, then to Unified Communications and on to Communications Enabled Applications, built on the SOA reference architecture. Both Carriers and Enterprises can take advantage of this evolution and Nortel has an opportunity given their install base and market share.

Still Rootin is right. I believe that Nortel can revive itself IF it narrows its focus significantly. In that regard, as Toungue.In.Cheek mentions, it is not necessarily a Enterprise vs Carrier focus – it is a Solution focus on UC, CeA and CeBP software (since bit portion of the Enterprise and Carrier requirements are blurring from a voice app perspective).

If you think about the application revolution due to SOA, every application vendor out there is taking their bread-and-butter app and adopting WS & SOA to wrap, modularize, componentize and create new services by interworking with 3rd party software. This is exactly what Nortel needs to do with the one super-rich application it owns – Voice (for both Carrier and Enterprise). This is what it means when it says, change to a Software, Solutions and Services company. From the recent product announcements such as ACE etc… it appears to be headed in the right direction….

I believe this direction is sound for what it is worth. What is critical is that it double down and focus on this ONE thing and nothing else. This means Dev, Mkt, Sales, Support everything aimed at this and nothing else. For this of course you need a cost structure that is not bloated with other crap that is not aligned with this strategy. And they need to work relentlessly to harvest their huge and still somewhat loyal installed base of Voice customers (both Carrier and Enterprise) and lead them through this transition.

This is the ONLY shot it has in Enterprise where it has strength of products, installed base and a perceived market leading position (Gartners MQ on UC). Hence the “firesale” activities to sell off anything that is not aligned.

Sales people crying poormouth!? The sales folks got bonuses every year while the salary folks got no bonus in 2002, 2003, 2005. Every year the company sent top sales people to exotic destinations as part of the sales award process. give me a break

Nortel Sales is an oxymoron like Nortel earnings.They had “trouble making sales” since the Owens era as this past CEO stated.

As far as Mike Z, he strikes me as admirable and the pinnical of honesty in interviews, ethical, down to earth, and admirable.. Aside from his dealings with MOT and promoting inexperienced/controversial Hackney, action spoke louder than words but as was hog-tied to what his subordinates fed him from benign revisions to ultimatum. This 3 to 5 years or 20 buying opportunity he led by example with did not do him any favors regaining credibility either.

Mark had some great points in whether he should have made acquisitions at a higher stock value or have divested parts like CDMA earlier before it took a hit. Mike is however praised for 1.5B in cost reductions but didn't Nortel already target this before hiring him.

In the dark, one has to take the good with the bad I guess. Who knows.

Coulda shoulda woulda in hindsight easy than being in the contemporary throws of decisions they must make, decisions that have not bode well for them in this retrospect.

Now what? I think everyone knows what now.

All eyes will be on what Mike has to offer in the way of Nortel's future.We'll finally get to see if Mike has what it takes to run a company like Nortel especially in this current economic environment.

As someone recently said,the honeymoon is defintely over and Monday will let all shareholders know whether we have a qualified CEO at the helm.

There's nothing like a good sweeping generalisation is there!?

Maybe that's the case in NA, but certainly in other regions the sales teams work their nuts off for a lot less money than they can get elsewhere to win new, profitable business for Nortel, despite the product lines not delivering on commitments, support staff being pulled out of the business, a massive over-reliance on hugely complex and time-consuming process etc, etc, etc.

Good point Still Rootin. The MSFT alliance was a change-the-game strategy that NT adopted. Frankly they did not have a choice. The UC war is going to be fought between vendors who own the desktop (MSFT, IBM) and anyone else with strong focus (Avaya) or deep pockets (Cisco). Nortel had its MCS but could not out-invest Cisco – so it decided to do the next best thing – partner with MSFT. Now that should explain why Nortel chose that strategy….

You are right in that the Nortel strategy (as we know it) is a short term strategy. Nortel is using the MSFT halo to sell to enterprises. Many of the wins in UC are based on the customer being a MSFT shop. But this is today's strategy.

But this is clearly not the long term strategy. Going into 2010+ Nortel needs to clarify how it will lead in becoming the leading communications choice for software and services. This is what I would like to hear on Monday!

“Like those Americans, Australians just don't understand (the) culture”

You are talking about peanuts compared to the Nortel overall sales. If it wasn't for CDMA Nortel would not exist today.

Correctamundo.

Take it easy desitute. Mommy is near by I am sure.

I wonder who in the Executive Leadership will have trouble sleeping tonight?

So, where's the 12-13 mil per person that you generate disappearing?
The Enterprise is just one big black hole run by an angry man.

the GE boys have destroyed this company and now they are getting their own friends in new positions and firing the rest.

Unfortunately tomorrow is the beginning of the death of Nortel. Not being negative, being realistic.

Putting people in charge that they have NO IDEA WHATSOEVER of the business and THAT THEY HAVE FAILED in their roles but PROMOTED and increased salaries…. THIS IS FRAUD AND ORGANIZED CRIME. read tomorrow's announcement and tell me I'm wrong

Capitalism at its worse here

Not dark at all.
4 percent cost reduction is all?
Why so modest.
No money to pay off people, especially the managers?

Not dark at all.
4 percent cost reduction is all?
Why so modest.
No money to pay off people, especially the managers?