Nortel Has a Pulse But….

With some focused management, I would believe in a heartbeat Nortel could survive and even grow. The problem is the current management and their total focus on profit and loss vs. staying in business. I have never seen a company fail that had satisfied customers and Nortel has done more in the past three years to drive off customers than one could believe. Even now management is trying to back fill skilled positions with unskilled people. It's a management thing, not the troops.

<yawn>

More filler….Ho-Hum….

MC

I dunno. This just doesn't seem to be a techical problem.

How does NT get past the fact that they only earn about $300k per employee vs. the likes of Cisco, $660k / employee, Juniper, $515k / employee.

Is NT getting MORE done per employee now that they have purged… and what of looming additional layoffs, is work getting easier on the inside guys, now that you don't have so many people to stumble over to get your jobs done?… doubt it.

Innovation goes beyond silicon. It's also in how you operate your business.

Lots of good companies with good people and good technical innovation have collapsed after they ran out of money. Nortel has simply run out of money. Even after they shirk their responsibilties to their secured creditors and settle for pennies on the dollar, they'll still have some HUGE pension issues that given today's economy they can't barter or gamble their way out of.

It's that latter point, if NT emerges in some smaller form, they'll still have pensions to deal with, like the 42,000 poor stiffs in the UK. If they dissolve the pension becomes the respecitive govenment's problems. But as indicated previously that isn't necessarily good for the pensioneer… see Canadian Pension Insurance Issues.

How will NT get past ALL of the Debt issues if they emerge?

Good one, and sadly too true.

Mr. Burton does not quite understand what happens when you give a Ferrari to a donkey rider…–bb

I do not understand how Mike Zudas and the BoD are allowed to continue in their positions and why creditors have not called for their resignations for their incompetence, arrogance and greed. What a group of monkeys.

The author of this article has no business sense.

Designing technology is one thing. Understanding how to make money is another. Nortel has been mediocre at the former and horrifyingly bad at the latter.

if web.alive is free I might think about using it. as it is people hide behind email, social sites – is this really needed to push people further into isolation?

That is the GE way.

Ignore what is special about a company, ignore what good, ignore the problems. But take every penny that is 'owed' you.

Nortel has strengths but had some serious problems. MikeZ still does not have the faintest understanding of what they are. And he doesn't care.

What Nardelli did to Home Depot was perhaps worse – He took a company that was special and drove it to mediocrity (and pocketed 100s of millions (!) in the process). Again he did not care what was special, he simply GEed it.

And Nardelli was a top tier GEer, runner up to replace Welch. MikeZ is a d-lister.

rfc1149,

I like your wording. ge (gi, verb ) example: to 'ge' something is to gut it of its actual value; to decrease shareholder equity; to eliminate any intrinsic value for the sole and exclusive benefit of its management; to Zero it! Comments…–bb

“Nortel has been mediocre at the former and horrifyingly bad at the latter”…

This looks exaggerated: although our products are not perfect, some of them won the praises from our competitors (I know it was 10 years ago, but so was the GSM BTS S8000, and I suspect there are other such success in the portfolio; Passport might be one of them). We could also remember our doomed R&D efforts of the LTE, which leads to convincing trials aborted because of the poor condition of the Company.

Nortel is full of yes men & sycophants thats why it has failed. People at all levels do what they need to stay under the radar , please their managers and survive the head count cull.

Teams have broken down with individuals stepping over anyone and everyone in order to survive

People no longer care, If something is broken they just shrug their shoulders and pass the buck.

A company so demoralised and weakend from within cannot survive. The leader s have pushed Nortel into an abyss from which it cannot come up from.

The sooner this company seizes to exist , the better for everyone. Life will go on , people wil find better jobs in better companies and the names Zafirovski and Hackey will fade into nothingness.

Better jobs? Not in this economy especially when you consider the fact Nortel pays above industry-average compensation.

Those layed off and about to be have a grim situation to resolve.

They spun off Netgear because the margins are very small. You can't afford to sell Netgear products to Enterprise customers, because you can't afford to support them. One support call and profit goes to 0%.

Netgear margins are sub 10%, the company consists of 1/2 dozen or so business guys who cut ODM deals with the cheapest supplier of the day in the far east.

Ever called Netgear for support? If it's a complex issue, forget it. Support isn't happening?

Cisco keeps Linksys at arms length for the same reason.

What did you mean by saying work council? Is it related with NT?

NT,

Actually that makes sense; the devil you know is always better than the one you don’t. Besides, the creditors know these guys will protect their (creditors’) interests or they (management) will not collect anything. ‘The enemy is my friend if we can mutually benefit’- an old Arab proverb, I’m sure…–bb

For those interested in trying out web.alive you can visit the Lenovo eLounge yourself at http://www.lenovo.com/elounge

Agree.

As well (this is really expanding on the intrinsic value)..

In large-ish, established companies there is an important dynamic. The 'minions' who do the essential work want to 'believe'. They want to think that their work is important, that they are doing something 'good'.

GE-ism destroys this.

In Home Depot, they talked about people 'bleeding orange' (Home Depot's color). The believers allowed Home Depot to be phenomenally successful for a long time. Under Nardelli, these believers were fired, demoted, demoralized and forced out. They made the company, then were screwed over (destroying what made the company great in the process).

Not that I believe there is imminent threat of a revolution but there needs to be a social contract between the 'leaders' and the people who simply want to do an honest day's work for a company they believe in.

Management has a responsibility to these people. To make the right decision to allow the business to prosper. And they will be very well paid to do so.

In Nortel's case, when MikeZ took over layoffs were necessary. Too many bad decisions (mostly by not deciding) had made the company too sick and too unfocused. But these could have been done with dignity, respect and most importantly within a strategy that could actually have saved the company. Cutting 15% of most every project was simply vindictive and further reduced Nortel's competitiveness. Lose-lose both the people and the company were hurt.

(Disclosure – I am a reformed 'believer'. My believe though died early in the bust long before the current 'leaders'.)

The probability of any viable business emerging from CCAA/Ch 11 is getting small. Consider the following obstacles:
• Incompetent BoD & CEO
• Convoluted and complex corporate structure
• DIP loans won’t be forthcoming
• Enraged employee base with zero or minimal incentive to stay
• CCAA moving at a snail’s pace
• Worst economic down-turn in decades and additional sales losses due to Ch 11 status
• Filing in 3 jurisdictions with distinctly different bankruptcy laws (Canada, US & UK)
• Apparently unprecedented approach of filing in Europe only in the UK to get creditor protection in all other UE entities with vastly different labor and insolvency laws
• Fractured creditors groups including the main group, informal group of note holders, and multiple competing law firms jockeying to represent recently severed employees, pensioners, unionized employees, ex-executives.
• Several entities not yet filing but might
• Complex and important JV’s
• Business assets diminishing day over day with huge liabilities
• Massive legal fees
• Tarnished brand name
• Talented employees jumping to competitors
• Severely damaged and struggling supply chain

I don't disagree with anything your saying. In my personal opinion, Nortel needed to create something like an iPod to save their bacon for a couple of years now.

The issue is when you have products like Netgear in the broader portfolio is the “enterprise” sales and customers end up using them because of their price point. Most of Nortels sales reps can't spell data, therefore they can't make the distinction between a consumer Ethernet switch and an Enterprise Ethernet switch. They see x ports of 100BaseT – that is what the customer wants – sell it.

Remember – Cisco bought Linksys. Bay Networks created Netgear.

Netgear wasn't meeting minimum margin requirements for Nortel. It all comes back to the executive leadership at Nortel. In this case you can't blame Z and company, Netgear was spun out prior to Z.

Burton says he has worked directly with some of the Nortel’s developers, and writes, “… they believe in this company and the products they are producing. These guys aren’t just drinking the koolaid, they’re serving it

Thats got Future spilled<.i> all over it.

The only miracle Acne can administer to his employees is:

* Nortel Discharge Solution

Where is Nortel’s Asset Tracking and Management controling costs and nhance safety and productivity in the labs?

Why didn't Nortel’s Clinical Alarms and Alerts trip when as emergency notifications mounted “wirelessly”?

Funny how Nortel’s IP Mobility Fast Start Solution won't allow small and medium-sized staff to enjoy many of the same benefits provided to Nortel’s larger healthcare customers – e.g. the BoD.

Nortel’s Secure Portable Office makes secure workforce mobility a reality

“Security, export this ex-employee from his office to the door and secure it”

Many things save lives in hospitals. Nortel is not pretending to replace antiseptic, that would be silly.

And Nortel is NOT doing everything badly. Nortel increasingly 'gets' the hospital market and is increasingly adding value. And consequently has (at least pre-bankruptcy) rapidly growing sales.

Hospitals are the sort of market that is natural for Nortel. They have lots of money, are paranoid about systems working and have complex and obscure (and often standardized) procedures making the market difficult for kids in the garage to compete against (a lot like 'old school' telecom).

There is a lot wrong with Nortel but this is legit.

People do try to focus on the positive.

And while there is a lot wrong with Nortel – incompetent executive 'leadership', 'business' 'leaders' with no understanding of the business or market, dysfunctional middle management, … – Nortel does have some decent products.

Of course they are not perfect (but what products are?) and most would benefit from business leader that could tell the market from a hole in the ground but they have points that a reasonable person could be proud of. Often these are the flip-side to their flaws. E.g.
A lot of Nortel products are long in the tooth – flip side, they are feature rich often having features that new products wouldn't even imagine implementing and they have healthy installed bases (i.e. lots of people use the products – foibles and all).

On the large scale, yeah its hard to be proud of Nortel. On the small scale, in one's day to day functioning on the product that one has worked on for the last 10 years, it isn't.

And when working with external folks (like Mr Burton) guess what, one will focus on the positive.

Burton says he has worked directly with some of the Nortel’s developers, and writes, “… they believe in this company and the products they are producing. These guys aren’t just drinking the koolaid, they’re serving it

Gee, that analogy's got Future spilled all over it.