Gartner Expects 18-Month Restructuring

with today's Circuit City's news, I am sure many people will be fast to point out how companies don't recover from CH 11 ,etc… but I would like to point out significant differences (just in case some brings up the comparison) between CC and NT
CC had no IP
CC had no cash, need to obtain financing
CC had no empoyees as important assets
CC probably rented most buildings
CC had no customer base
…
just a few comments… add as you wish

ah yes… and then we have the pathological optimists who over look what will happen between then and now…

With accelerating cash burn, their remaining cash is now used to wind down run-away operations. Can they even fire sell anything to last that long when they can't even fire sell anything sell now.

Why do they assume it can be sold at all, let alone for who knows what by then, or that they will still have this “large customer base” in 18 months from now?

Does this overly exorbitant 18 month term assume global recession will only last through 2009, like they have even that long or something.

Who are these guys, I thought they had a good reputations or are big players. Once then, so does/is Citibank and we saw how Genovese and so many others analysts fared calling Nortel so far.

They act as though its all business as usual and that their bankruptcy will have no catalyzing impact on customers, suppliers, or demand for their units they can not sell now, let alone later, for even less, if anyone wants them by then that is.

I suggest things are exponentially more dire vaporizing to an overkill much faster than these analysts who never did get Nortel right.

It always did disappoint and I expect nothing different, let alone now. Maybe I am getting to cranky if happy talk is starting to bother me at this stage =)

Joremero;

On CC Favor, Just like with other Service Providers like MCI or the Airlines you didn't need to trust CC to buy a TV there, it was an Investment you knew will have a Warranty directly with Factory just like if you buy from BrandSmart, and still they could not make it. Nortel is a Manufacturer, therefore the buyer needs to trust the service will be there for the long run. In the case of the Airlines, If you could buy a cheap ticket from a bankrupted line, you would not care because you trust Boeing, or Airbus, once you got to your destination you don't really care who got you there. that is how I explain that for service providers is not the same situation, it may be easier for them than for Nortel, On top of that I work at Nortel and I can tell you many people don't trust the leadership today, despite the “I Believe” efforts, that I personally find Pathetic.

Good comparison. I am sure many were already drawing parallels to the two situations and starting to worry even more.

However, it doesn't remove the fact that the “CC scenario” is one that could still happen. When the major talking point of one of yesterday's GISes was the reiteration of “We Are Not In Liquidation”, you have to wonder what the real situation is, given this management's track record on accuracy in statements.

IMHO there's less than a 50-50 chance that Nortel will pull out of chapter 11 as even a shell of its former self. Other than a few knick-knacks (e.g. Radware's possible purchase of Alteon) Cisco, Avaya, Ericsson, et al are simply not interested in purchasing any of Nortel's increasingly obsolete and irrelevant portfolios, even at fire sale prices. Instead they're going to take advantage of the confusion and insecurity surrounding chapter 11 to concentrate even harder on taking out Nortel's remaining customers and channels.

Anyways I doubt that reorgization and reemergence as a leaner company were the real reasons the GEnuises filed for chapter 11 protection. Zeroman and his toadies incompetence has become so obviously there was no chance that he would be able to suck out another 10 million dollar pay package this year, as he did last year in spite of continuing losses and layoffs and an 80% drop in stock price. At best he would get “only” his 1.2 million base salary. The BOD might have even fired him in spite of the difficulty of finding a replacement. But under chapter 11 its a whole new ballgame. The GEniuses will apply for, and probably receive, Key Employee Incentive Plan (KEIP) retention bonuses under chapter 11. Heck, as part of KEIP they could even be awarded big golden parachute severance clauses after shafting the rank and file out of their own packages. Chapter 11 is the GEniuses best bet to continue receiving lavish pay from Nortel's remaining $2.5 billion.

Clearly any future state of Nortel is now in the hands of the courts and creditors. At this moment, it is impossible to say given that it will be a few more weeks before Nortel files their Plan of Reorganization with the courts and potentially move forward to negotiations with creditors.

However, there is something very important to keep in mind and that is the role of Nortel's Voice solutions in National Security, Military, Government, Emergency Services, Policing and Hospitals. Those systems simply can not disappear. Somehow they need to be preserved for a quite a few years.

Now this doesn't mean that the Nortel brand must exist, but it does suggests that these critical systems and applications stay in control of North American interests. Perhaps this could lead someone like IBM to take over this part of Nortel or for the courts to see that it is in the best interest of National Security to have this part of Nortel emerge from Bankruptcy Protection in support of these critical systems.

Seattle, Washington-based F5 is offering up to $9,000 in trade-in credits on Nortel's Alteon technology, looking to capitalize on the firm's recent problems.