Enterprise Customers Hit the “Pause Button”

By Mark Evans | Published: May 21, 2009

While Nortel’s enteprise customers are apparently not walking away, Joel Hackney concedes that they have hit the “pause button” when it comes to buy equipment.

He told Network World that customers are waiting until July 30 when Nortel’s restructuring plan is unveiled. As well, he believes customers are being hampered by the economic uncertainty.

“We’re seeing a pause button in a large portion of our customer base,” he said during the Interop conference. “It’s caused by the economy and Nortel’s position.”

In the first-quarter, Nortel’s enterprise sales dropped 41% to $395-million from the year-earlier period, and 34% from the fourth-quarter.

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  • JJHack

    Hi,

    This is Joel. I love you all on this board…very informative and interesting discussion on my beloved Nortel.

    Didnt' realize how much hatres toward me and my friends. We're only trying to do the best we can under this challenging and difficult condition.

    We will turn this company around in a few months and if not, you can then criticize me and the leadership team. Give us a chance

    Thanks for listenting…

    JJH

  • Lookahead

    yes, we know you and your boss Z man's only skill to run a company is to lay off employees without paying a single cent.

    This is your great experience compared to other company's execs. By quietly layoff people, you can even make profits and cash balance growing while other companies have to pay high rent, high employee salary.

    you are very smart.

  • gone2moro

    Zzzzz Zzzzz Zzzzz…..oops sorry.. hit the Snooze Button…. on this Pause Button conversation.

    Another week goes by… and nothing. No news, no care, no severance… guess I'll go cut the grass.

  • Got_Out

    $250M investment? Must be some creative math here. Given the size of the R&D team, that would be huge and frankly doesnt sound reasonable given the breadth of portfolio and diverse investment strategy. Must include partner investments not paid by Nortel.

    Of course, a new leader is far smarter than those that went before (see Nortel Policy)

  • VanMan1

    For more months!

    …four more months…

  • The_Closinator

    …and if there is no change in revenue velocity and trend in 4 months, what will be the next excuse for flaccid performance? Nortel's situation is not like fine wine – it does not improve and become more valuable with the passing of time.

  • Breel

    The Carpenters frequently cancelled tour dates, and they stopped touring altogether after September 4, 1978, when they gave their last live concert at the MGM Grand in Las Vegas.

  • AnotherSlave

    “The judge in the case also gave Nortel until Nov. 10 to receive creditor approval for the plan.”

    Operationally, what exactly does this mean?

  • nortelex

    Not sure but they are still going to do more cuts to meet the target for their bonus.

    Dont forget layoffs are tied to bonus for executive.

  • joremero

    I doubt you are the real Hackney….any proof?

  • protosphere

    They can not be compared to solvent peers.
    Even if decline indicates 40% vs. 20, they are losing twice as much, and even this is no solid indication the way they pay for expensive revenues.

    A greater indicator would be the stability they reiterate without substantiation in this post bankruptcy decline. What will Q2 show AFTER the ever eluding “plan” is introduced.

    They are already no longer a 10B company in this rapid decline to say they no longer need these revenues to be profitable like the fox jumping for the grapes fable. A plan has eluded them for years as much as profitability. What on earth makes them think they have a chance after restructuring yet again, their rapidly declining installed base and business unts as their greatest hope?

    Lets see what the plan is come July, let alone the rate of decline in Q2, not that this will effect their growing debt /liabilities and declining business markets to take anyone hostage in yet another Nortel gamble.

    Best to salvage what they can and run, let others provide progressive careers for the their employees, who are credible , not bonus driven over innovation, who pay pensions and severances, not filled with hype to contradiction following one of the greatest frauds on earth and extended repair of numbers they present like a sales flyer.

    Nortel can not be trusted with this green management team any more than their bonus predecessors. Best they do the right thing and thankfully just go. Enough is enough already than to keep the desperate misleading alive even after insolvency.

    Lets see how long their cash, creditors, and the courts will humor their credibility and traditional hype.

  • TongueInCheek

    Generally speaking, the Creditors have significant influence on any major asset sale or restructuring. A restructuring plan is mostly about a corporation's balance sheet.

    The current balance sheet shows Assets of $8.103 Billion, Liabilities of $4.047 Billion and Liabilities Subject to Compromise of $7.691 Billion. That last number is the key here as cash value from any sale or restructuring is applied against that $7.691 Billion and effectively paid to the Creditors. Clearly they will want to maximize the cash value of any sale to increase their percentage payout against that liability.

    If they are successful in clearing the full amount of $7.691 Billion (and that is the #1 goal), then the remaining balance sheet is in good shape for the future.

    The other key point in the recent court order is that Nortel is granted exclusivity to create, file and negotiate the plan through Nov. 10th. This means that it would be extremely difficult for the Creditors to file a different plan or to force them into Chapter-7 or liquidation, which would shutter the entire business and terminate all remaining employees.

  • protosphere

    “How much can the current management do without the creditor approval?”

    Apparently get bonuses approved. (circumventing their creditors)
    Creditors wanted to see a plan before further bonuses were approved,

    50% more in bonuses if restructuring is approved.

    Note that management leached almost $400M during Nortel's decline over the years, printed billions, sold assets, diiluted, paid dearly for expensive revenues as they finangled and hyped.

    Just before bankruptcy 80-90% of their EBT in their aging CDMA cash cow went out to pasture in gavor of GSM… now what. Now nothing but try to shrink again to bring Nortel in line with still NO EARNINGS in their death spiral. No earnings no plan, easy as that. No plan no bonuses and no Nortel.

  • InTheRoundEye

    US BK extension, the customers are going to wear out the “pause” button:

    http://www.fiercewireless.com/story/nortels-u-s…

    When does it end?

  • Nortel watcher

    Total judicial incompetence.

  • nblog

    Wow you are a true genius how did you figure out it wasn't the real Joel?

  • jokerman2009

    form medias, Nortel got nothing in $30 billion-3G cake. She is disappearing in China's telcom markets.
    http://bbs.tech.163.com/bbs/tech02/134544764.html

  • broadbandbill

    when they hit 6 feet underground…-bb

  • broadbandbill

    when they hit 6 feet underground…-bb

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