What’s the New Nortel Going to Be?

By Mark Evans | Published: March 13, 2009

Assuming the speculation is accurate that Nortel is intent on selling its enterprise and wireless businesses, what’s the New Nortel going to be.

Clearly, it will be significantly smaller with about $3-billion in revenue, let’s say 5,000 to 10,000 employees, and perhaps profitable. In terms of what it sells, Nortel would be selling carrier voice technology, along with its metro Ethernet network business, which was on the sales block a few months ago.

“They could bring the features of Ciena (an optical company) and Sonus (a carrier voice company) under one roof and be a competitive company,” Duncan Stewart, an analyst with DSAM Consulting told the Montreal Gazette.

It goes without saying the New Nortel would be a shell of its former self, and its status as Canada’s flagship high-tech company would disappear.

And it would be a long way from the heady day of the telecom boom when ex-CEO John Roth was talking about $40-billion in revenue.

More: In terms of what Nortel could get for its wireless and enterprise units, the Globe & Mail is suggesting $1.3-billion.

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  • sick_sigma

    The primary purpose of bankruptcy is to keep your suppliers/creditors from suing you in court.

  • Nortel watcher

    Wouldn't creditors be able to require equity in the new post-BK Nortel for the portion of the debt NT was not able to pay?

  • Nortel watcher

    Grindstone, changing gears a bit, have the two recent layoff rounds included anyone at the director level in the Americas (including CALA)?

    This is just to get an idea of how political the process of choosing victims still is within Nortel's old-buddy system.

  • Cataractus

    I just can't see how Nortel can ever pull out of Chapter 11. No Nortel Line of Business that I know of makes money and all have seen continuous declines in market share. This in itself makes most Nortel LOBs unattractive to potential buyers even at firesale prices. Who wants to buy a business that doesn't make money?

    Also, even some Nortel portfolios that (at least until recently) remained competitive, like Enterprise VoIP, are further stained by the failed business paradigm (e.g. Lean Six Sigma, “Centers of Excellence”) implemented by the GEniuses. I doubt that anybody would want to take the risk of attempting to fix the flawed business practices they would inherit from the GEniuses.

  • sick_sigma

    What is the difference between hardware and software any more? For the most part, technology is technology is technology. A few different form factors here or there but it's all the same stuff really.

    Technology is the product
    Form factor is the packaging

    Customers do not care too much about packaging. Profitable companies understand this.

  • rfc1149

    Absolutely agree that changing parameters like consumer vs carrier does change the equation significantly.

    What I was reacting to (and you didn't explicitly say but others have) is 'commodity equals bad business that Nortel needs to get out of' and the usual converse 'X (say software or services) is 'good' therefore Nortel should get into it'. My examples were to indicate that – it is more than possible to be a (very) successful company in a 'commodity' business (if one gets it) and implicitly it is more than possible to be unsuccessful in a 'good' business.

    Trying to be optimistic (but not silly), there are some good businesses in MEN but it needs business leaders who a) can recognize which are which and b) who are not there simply to empire build. CVAS is tough but maybe.. And if Nortel gets rid of wireless (a golden anvil around Nortel's neck) and enterprise (some good businesses there too but again requires focus) Lots of ifs but…

    I have no doubt that if the bondholders can get paid off, they will be ecstatic and they really don't care about Nortel's viability (other than to the extent that their bonds become stock).

    Aside Nortel in its current manifestation is competing with Cisco (various ethernet, routers etc and in enterprise big time), IBM (in services) as well as the 'historic' carrier competitors (ALu et al).

    Google/Yahoo (Messenger) /Ebay(Skype) while not really competitors today are *potentially* huge. They have VoIP networks and supply (significantly) their own 'equipment'. They may never try to sell 'equipment' to Verizon but if/when they become significant competitors to Verizon, they will own a big chunk of the VoIP 'equipment' market (A bit reminiscent of the old AT&T)

    Note also that global services has be re-orged back into the lines of business. Of course who knows whether the buyers will want the services part of respective businesses but the bulk of the services business (e.g. network engineering, hosting Nortel products etc) are tightly coupled to the underlying products. I.e. its hard to see anyone going to a CVAS/MEN Nortel to host (say) Avaya (formerly Nortel) equipment.

  • S_O_S_This_is_HMS_Nortel

    Damman

    You must be in a CoE (Turkey or Mexico ??) or communist China.

    Canadian goverment won't bail out the hi-tech company with white collar workers …they believe its' easier for these people to find job and get another career…They rather spend the money on the lowly educated people like bus drivers, auto workers, steel workers and garbage pickup people..

    It's a socialist state and will remain that way ..No bailout for you !

  • whatnext4nt

    “No Nortel Line of Business that I know of makes money and all have seen continuous declines in market share. “

    What a crock! Have you ever read any quarterly reports from Nortel? CDMA, for example, has been a hugely sucessful business over the last several years, and continues to be, despite the fact that it is in a stage of gradually decining sales (which could be nicely offset by gradual uptake of LTE sales).

  • less

    “Business Made Zimpleton”

  • 27539

    What’s the New Nortel Going to Be?

    Ever heard of RCA? Do you know what kind of company RCA once was? What is it now? Nortel is the next RCA (think empty shell)

  • 27539

    What’s the New Nortel Going to Be?

    Ever heard of RCA? Do you know what kind of company RCA once was? What is it now? Nortel is the next RCA (think empty shell)

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