Nortel May Not Sell MEN

By Mark Evans | Published: February 4, 2009

Update: Nortel has officially taken MEN off the block

An interesting comment from Nortel’s Joel Hackney about the how the company may take its Metro Ethernet network business off the sales block:

“We are reassessing that decision to potentially sell MEN,” he told NetworkWorld. “With the actions we’re doing on creditor protection, it gives us time to reassess that. The industry has clearly shown that the MEN business has some strong technologies.”

The decision to sell MEN has always struck me as act desperation given it’s probably Nortel’s crown jewel given it has growing sales and leading-edge technology that customers want to buy.

Before the bankruptcy filing, Nortel obviously believed it had to sell MEN to raise some much-needed cash but now that the bankruptcy filing could let Nortel out of some of it debt and pension liabilities, the need to sell MEN may have disappeared.

In the end, if Nortel does decide to keep MEN, it may be the best thing to happen in terms of the company’s long-term future.

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  • MyHeadHurts

    As much as everyone might malign Nortel, part of the problem is actually due to how products are developed inside the company. While Roese generally failled in bringing the R&D teams together under “one roof”, the concept of “one platform” to rule them all has been a very long time on-going process for them. In the last 10 years, major strides have been made to ensure that software and hardware IP are shared amongst major product lines in each division. So, that means MEN may have carrier guts, or carrier guts are in CDMA products. This is actually very innovative and has allowed Nortel to squeeze more out of it's R&D budget. Say what you will, but, there some very smart people who've done this work :) It also allows you to job share and spread around the knowledge of the platform. This way product support can be generalized, etc. It's one of the reasons why the layoffs have not really killed products, the IP (intellectual property) core is still intact. It's actually very elegant. Nortel is fond of elegant solutions for difficult problems. I think that is one of their differentiators.

    From a IP perspective, and integration, it's very hard in R&D terms to separate business units apart. Unlike what Sr. management talks about building empires, the worker bees have been busy simplifying the underlying architecture to make it easier to reuse/recycle code and hardware. If you try to sell MEN, you'll probably run into a long-term M&A cycle/process since Nortel is not known for great divestiture work. This would be probably related to how various IP would need to be split out and licensed to the acquirer since other Nortel products still need that code base/hardware/IP. This makes an outright “asset purchase” very hard. This is one of the M&A problems with technology companies. M&A is easy (easyish!), while divestitures compartively are not!

    I'm going to reason that the old Bay Networks/Enterprise is the easiest to strip out since platform sharing is relatively limited between the old BNR and Bay sides (politics, egos, poorly architected products that do not integrate well). You can see this very clearly. Bay products, Alteon products are distinctly different than other “Nortel” products. Just look at the chassis, buttons, software etc. My guess is Nortel wants to be a “enterprise” company at heart, and selling enterprise would probably doom the rest of the pieces to a slow lingering obscurity/breakup.

    So, I'm very much inclined to believe the rumours that Nortel has had it's share of companies interested in MEN. Pulling back is a combination of the economy (getting fair value for MEN), change to BK, and the level of effort required on both Nortel and the acquirier to separate the assets.

  • Ex_Nortel

    Unfortunately, it is is true. The facts are:
    (1) Before 2007, Nortel had numerous P&Ls, 36 P&Ls at the time of the UMTS 'sale'.
    (2) Nortel has one P&L today and they are unable to break out receivables, assets, expenses, tax credits, tec. on a per business basis
    (3) They were unable to break out businesses for a major private equity firm in the summer of 2008.
    (4) They have been unable to coherently explain their revenue recognition and upcoming revenue streams from defereed revenue to potential asset buyers.

    All of my previous posts have been factual, including predicting bankruptcy in 2006, predicting the disasterous quarterly results of the
    past 4 quarters, and warning that Nortel would not pay severance to conserve cash.

    And I don't appreciate your insinuation that I am lying about my facts.
    Learn something about the networking business before you spout off in such a foolish fashion.

  • YesWeCould

    -1 to you, mein freund, for not reading what's been goin on here before posting…

  • TongueInCheek

    Why am I not surprised you would find depicting Nortel executives as Nazis hysterical?

  • broadbandbill

    We have all been saying the same thing for over a year now; 'STRAGDY'–bb

  • broadbandbill

    Amen…–bb

  • broadbandbill

    These yoyos are plying high-stakes hold 'em poker with a 7-2 off suit (worst hand in holdem) but they are using employees beneifts as their bank and not their own money. GEngsters, all of them….–bb

  • broadbandbill

    “Maybe Nortel employees need to be cautious these days”

    TIC,

    You’ve got to be joking? Have you any idea what it feels like not knowing if you will receive a paycheck next week or next month?

    This heartless and soul-less management has turned ALL of Nortel’s employees and shareholders into mere co-dependants, having to put up with mental anguish and emotional abuse that may never be truly eliminated. I just wish that some crafty lawyer figures out a way to nail these bozos…–bb

  • Casual_Observer

    I wonder how much money Mike donated to Edinboro U. to get this built with his name on it. Surely this was more money that could have been saved by Nortel and paid for severances instead.

    http://www.youtube.com/watch?v=Pu1Ps0LYmM4&feat…

  • YesWeCould

    This would have been a more suitable soundtrack for the video…

    I'M FOREVER BLOWING BUBBLES
    (John Kenbrovin – Jean Kellette)
    « © '59 WB Music, ASCAP »

    I'm forever blowing bubbles pretty bubbles in the air
    They fly so high nearly reach the sky
    Then like my dreams they fade and die
    Fortune's always hiding I've looked everywhere
    I'm forever blowing bubbles pretty bubbles in the air

    (I'm forever blowing bubbles pretty bubbles in the air
    They fly so high nearly reach the sky
    Then like my dreams they fade and die)
    Fortune's always hiding I've looked everywhere
    (I'm forever blowing bubbles pretty bubbles in the air)
    [ horns ]
    I'm forever blowing bubbles pretty bubbles no more troubles
    Pretty bubbles in the air

  • broadbandbill

    Blood money so he can have more trophies…–bb

  • protosphere

    Probably for the same reason you have failed to see analogies.

    Support lies with intent is more shocking. They did employees and shareholders no favors. Pathologically seeking acceptance or quick to prude strikes me as misleading where crass objection to on the basis of political correctness is spineless and underhanded. Lighten up. it was funny. Be a man.

    It is not that they won't sell MENs than they can not. Easy as that. Why? Because their assets are under the control of a bankruptcy judge. Got it?

    What did Nortel want you to believe? That they won't rather than can't? More showers and koolaid.

    They are even gagging their employees from speaking with the media after downplaying folding which they knew of months in advance. No wonder you fail to see the humor. War crime trials with Dunn coming.

    Do you honestly believe the reallocation of such a small percentage of funds are to appease creditors as Nortel claims?

    They also try to turn bad news of unable to sell it into good news that they won't sell it. But you believe what you want over the years. Never mind us.

  • less

    “With the actions we're doing on creditor protection it gives us time to reassess [selling MEN]”

    A little more time is all they need. Oh, and a little more money.

  • less

    “Goehrings concern is not without merit. If our communications systems break down – which could happen any hour now – we'll indeed be cut off from the outside world. Commands and directives can no longer be delivered.”

    “I disagree. Goehring is making a grab for power. I never trusted the mishpoke over in Obersalzburg that sucked up to him. It reeks of <i?putsch.”

    “What a loser! what a sycophant! #%#$…lazy $#%$$$%…[inaudible]… the Luftwaffe… and what do he do to it??!! For that reason alone he should be placed against a wall! This morphinist allowed corruption to take hold within our state! And to top it all… he betrayed me! I want Goehring's powers relinquished. If I shouldn't survive the war I want him summarily excecuted!!”

  • less

    In 1938, Göring forced out the War Minister and the Army commander, They had welcomed Hitler's accession in 1933, but then annoyed him by criticising his plans for expansionist wars.

    Göring acquired a vast Prussian estate… built his great manor house…exulted in aristocratic trappings… coat of arms… ceremonial swords and daggers… owned many fancy uniforms… his patronage of music… collected art… looting from numerous museums… designed an elaborate personal flag… carried by a personal standard-bearer at all public occasions….. directed the first attacks on Britain from his private luxury train.

    Aircraft production lagged. Yet Göring persisted in outlandish promises.

    Göring was in charge of exploiting the vast industrial resources… proved to be an almost total failure…little of the available potential was effectively harnessed.

    Göring withdrew from the military and political scene to enjoy the pleasures of life as a wealthy and powerful man. His reputation for extravagance made him particularly unpopular as ordinary Germans began to suffer deprivation.

    Sweating in his cell in the evening, Göring was defensive and deflated and not very happy over the turn the trial was taking. He said that he had no control over the actions or the defence of the others,

    Sooooo the opposite of regal leaders in power. I mean , cmon, who has a private train (especially when theres private jets to be had)

  • exnt2

    somebody has talent hopefully did not do this all day at nortel. looking forward to part 3. I think if nortel changed its business and started in the spoof business they could do better.

  • LonelyOpsGuy

    Wow…..profound….

    Karma patrol….just like the Mounties….They always get their man…..

    Revenge is a dish best served cold.

  • FlyOnWall

    drinking_the_koolaid, based on your comments you are an ex-Nortel R&D who blames the business primes for your situation. Have you ever looked in the mirror and blamed R&D for whining about actually coming to work and working? Have you seen the line ups of R&D people talking, pondering, and drinking Tim Horton's all day long? The arrogance that being technical automatically translates into success is truly astounding.

  • Teleguy

    LOL. Wow, you predicted the bankruptcy and the disasterous Q results?? It didn't exactly take a crystal ball to do that.. Nortel has been declining for 9 years. It was raised several times as far back as 2002. I think analysts and Nortel employees beat you the punch here.

    I was challenging your assertion that MEN cannot be broken into a “separate and distinct entity” from Nortel. That is completely false and yes I know the product line. The P&L numbers are available and easy to understand.

    I fully understand the business as I work in it, so keep the childish insults to yourself.

  • NTengineer

    Status of M.E.N. divestiture in the news
    A message from Philippe Morin

    February 04, 2009

    Philippe Morin

    Reuters ran a story today that said we had suspended our plans to sell our Metro Ethernet Networks business. The story is consistent with the messages I shared with you during my GIS on January 14, when I explained that the divestiture process around M.E.N. was “on hold.” As you know, Nortel has entered into a process of putting together its recommendations for an overall restructuring plan, and that plan will ultimately be subject to approval by the new creditors committees, as well as the courts. That work is ongoing.

    Bottom line this isn't news. What's important now is to continue our focus and commitment to come through this period with an eye toward the best possible outcome.

    We continue to win new business in a very challenging environment. Since the September announcement of the intention to explore the divestiture of M.E.N., we closed a total of 23 new 40G deals, and in total, we have 43 wins and more than 57 network deployments. Since Nortel's January 14 announcement, we've won two new major 40G network deployments. We closed the year with strong order input and our Sales team is not letting up. I'm very proud of their passion for winning and continued momentum.

    As you know, our sales success is underpinned by our world-class innovation and that same innovation has customers asking us to continue to push the boundaries beyond 40G. Our design teams are answering that challenge by targeting the delivery of our 100G solution by the end of 2009. We are moving forward with the day-to-day operations of the business and also planning to be visible and engaged with customers at major events like OFC/NFOEC and SUPERCOMM, among others.

    I know it's very challenging to keep focus in an uncertain work environment and I appreciate how everyone is working to overcome the obstacles and challenges. Over the coming weeks I will share more details as they become available. I appreciate your continued support and confidence in the Metro Ethernet Networks business.

  • broadbandbill

    Sell MEN (future jewel) but keep CDMA (rusty junk). Who thought these guys business skills? Oh yeah, I forgot; it was Jack Welch….–bb

  • less

    Bubbles are essentially “wireless packets”. Maybe investing in them would offer Nortel a cheaper alternative to LTE.

  • less

    Suspend your disbelief. BELIEVE!! If only for a little while longer!

  • broadbandbill

    “To believe or to doubt require no logic; both are binary-based decisions that circumvent our ability to reason.” – Ralph Nader

    Give me reasons not directives…–bb

  • less

    Bubbles are essentially “wireless packets”. Maybe investing in them would offer Nortel a cheaper alternative to LTE.

  • less

    Suspend your disbelief. BELIEVE!! If only for a little while longer!

  • broadbandbill

    “To believe or to doubt require no logic; both are binary-based decisions that circumvent our ability to reason.” – Ralph Nader

    Give me reasons not directives…–bb

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