Is Avaya the Logical Buyer for Enterprise?

Avaya is probably the worst buyer for Nortel amongst the bidders but namely for every Nortel customers and employees out there. Avaya's closed architecture means that Nortel customers would have to be forklifted if they didn't leave on their own accord. And Avaya with a large North American footprint doesn't need the employees either. Siemens/Gores on the other hand has a much smaller NA footprint than Avaya and sees it as a strategic area. Not only are their offerings much more open than Avaya, but they need more people in NA which is good for both customers and employees. And the Enterasys and Nortel products while similiar in terms of hardware typically have had their sweet spots in different verticals.

For the same reason that Nortel walked away from buying Avaya almost two years ago.
"messy, fraught with integration issues” RBC Capital Markets analyst Mark Sue
"the combination also would have posed significant challenges" UBS Investment Research analyst Nikos Theodosopoulos
"UBS imagined $250 million in synergies from a Nortel/Avaya merger over several years, with $50 million to $100 million coming in the first year. Synergies would come mainly from product-related sales, general and administrative expenses but would have been harder to find in product development and supply chain areas" UBS said.
"And while Avaya sells most of its gear directly to its customers, Nortel relies much more on resellers, making it harder for the combined company to unify and rationalize its sales channels. Avaya wouldn’t do much for Nortel’s revenue growth, either, UBS said, anticipating nearly 3% growth from Nortel next year and a little more than 4% growth from Avaya."

I am wondering what will happen to the employees if Nortel Enterprise will be sold to one of those companies. I am working at one of the affected sites and people are very concerned. Many are already looking for jobs and are scared of what may happen. Is too bad to fire people, they are working hard here and are doing great job. Without the employees working here, I believe that Enterprise would not be even close to what it was. We are afraid that those who will buy Enterprise will layoff many of us. Do you believe that we should worry? Who will be a better choice for the employees? What will happen to us if Enterprise will not be sold to anyone?

If its not sold in one piece it will be sold in bits. It really needs to happen soon. The longer it is left hanging the less confidence there is.
I agree it is very bad for employees whatever happens. Sad days.

It depends on what site you are on and who will buy Enterprise.For NA employees Avaya will be the best-acquirer.But if Siemens enterprise buys Enterprise,they would prefer cheaper countries esp Turkey.

Whether Avaya is the best case for NA employees is open to debate. I am an NA enterprise voice employee and we have been living in fear of an Avaya purchase for some time now. Of all the bidders it is my understanding that Avaya has the greatest amount of overlap, and they are clearly interested more in our install base than our products. Siemens, on the other hand, is looking to expand their North American operations.

IMHO, the best case is a private equity firm that thinks it can make a go of the business provided a smart management team is in place. But hey, I'm looking out for my own best interests at this point...

It's been suggested across multiple sources that there are 3 possible contenders for the Nortel Enterprise Stalking Horse Agreement and auction. We've seen reports of Silver Lake Partners (Avaya), The Gores Group (Siemens Enterprise Communications) and a 3rd Private Equity company that hasn't been named.

After digging around looking for other Private Equity plays with a technology portfolio, I wonder if it may be Wesley Clover, which has Terry Mathews as their Chairman. Nortel Enterprise could easily be set up in this organization to deal with larger enterprise accounts while the Mitel entity looks after the SMB segment.

Who knows, but after doing some research on Wesley Clover it looks like they may be that anonymous 3rd Private Equity play.

The thrid main contender is Shared Technologies.

My struggle with Shared Technologies is how they would operate the business while limiting major conflict with their other partners including; Avaya, NEC and Mitel. It doesn't make a lot of sense to me unless their plan is to operate Nortel Enterprise as a separate business. It wasn't that long ago that they became an Avaya Partner we well.

Nearing completion:

http://ctv2.theglobeandmail.com/servlet/story/R...

"Nortel Networks Corp. was close to a deal last night to sell one of its key businesses to rival Avaya Inc.

The sale of the enterprise unit to Avaya would mean that over the course of a single week the 127-year-old Canadian tech icon had agreed to sell off assets responsible for nearly half its revenue, following a deal with Nokia Siemens Networks for its wireless assets announced June 19.

Nortel and Avaya cleared one of the last major hurdles on Thursday and the two were near to signing the paperwork on a deal, worth as much as $500-million (U.S.), a source familiar with the situation said.

The two companies had alerted some of their major customers and resellers during the week that a possible deal was in the works. "

If this is true this wil surely lead to the the flooding of the markets of the Enterprise workforce.

Well, inkeeping with the activities of E&Y, the hierarchy and of course the BoD.

Great way to start a week, eh!

Wouldn't an objection from the creditors on the Nokia deal also disrupt any possible current deals on the table for Enterprise, etc..? You would think this situation would freeze any potential buyer of other slices of the Nortel pie stick that slice on ice for now and wait to see how this objection plays out..

What about CVAS? all talk is about MEN and Enterprise, yet nothing about CVAS

what is cvas? is it not part of nsn deal

carrier voice application solutions

There are 4 potential buyers including IBM and HP.

IBM and HP? Seriously? That would be very suprising.

Here's who lightreading has pegged as suspects:

http://www.lightreading.com/document.asp?doc_id...

Yes it is really surprising.I have never thought of IBM and HP I should admit however when I dig deeper it may be really reasonable for them since CVAS platforms consist of lots of servers and a database software.A good market to sell servers,DB2 and AIX software.

I guess what people are missing is the fact that Nortel has Nortel Government Solutions which is very profitable to Nortel and maybe the silver lining in a Nortel Enterprise sell. Nortel Government Solutions currently has the the Social Security Administration contract for 10 years worth 100 million and they also work closely with General Dynamics in various GSA contracts. Whoever buys Nortel Enterprise would indeed put themselves heavy into the federal arena.

someone should whack Hackney too

Docket 962, 963,964 - Objections from the creditors to the CMDA-LTE sale is complicating the stalking horse sale and will likely delay the stocking house sale.

http://chapter11.epiqsystems.com/docket/docketl...


This is complicating the stalking horse sale of Enterprise as Nortel wanted to use this deal as a template for the sale of the other divisions.

The 3 candidates at this time for Enterprise staking house are:
Avaya, Gores Siemens and Shared Technologies ( A distributor of Nortel - seems strange since they signed a distribution deal with Avaya Jan 20/09 after Nortel Filed for Bankruptcy protection).

There is also a private equity firm interested that may bid post stalking horse.There are also as a number other companies interested in pieces of Enterprise.

Wouldn't an acquisition by Shared Technologies create a fundamental shift in their business plan? Shared also resells Avaya, NEC and Mitel (along with Nortel) so an acquisition of this type could impact those relationships. Granted, it can be assumed that owning Nortel Enterprise would provide better gross margins than a reseller agreement.

Can you confirm where you've heard that Shared Technologies is a candidate? We had heard such rumors (quiet rumors) but have yet to have seen anything leaked to the news.

* Nortel's creditors, suppliers oppose Nokia Siemens deal

Probably an expected legal wrangling??

http://www.reuters.com/article/marketsNews/idCA...

going to drag this process on. 650 million will turn into 450 million by august.

nortel is taking faster than a comet plummeting to earth. sales are down a whopping 40% getting worse everyday. any news or comment

More delay....more bonus payments for the ELT.....

Just wonder how Avaya deals with these Nortel directors and managers?

On Nortanic and AVAYA negotiation table:

Nortanic VP: "The prerequisite of this deal is you secure my job in Avaya, with $250,000 bonus each year, then I can sell you at 40% discount and 50% reduced staffs, how is that? I can even recommend your son's company as perspective supplier of our current product line"

Avaya: Sorry No, I can only offer you $18/hour as a cleaning department manager with 2 weeks paid vacation, This is the best we can offer."

right on part 1.

Good thing Hackney isn't in CDMA negotiations with NSN and NA President Sue Spradley.

I'd like to Hackney try to order Sue Spradley around the Nokia parking lot. Sue would kick Hackney's sorry @ss across the Nokia campus.

Great visual image and terrific comic relief. Thanks for that!

If she could kick his boss' ass as well as she did can you imagine what she could do to Junior? Celebrity Death Match I would gladly pay for...--bb

would be nice to see her slap Hackney and choke him in the parking lot. Hack will then whine claiming assault.

No big sale news today ?

Yet again, just folks trying to stir up FUD. Whatever...

Would LOVE to hear information that is accurate and fact based here on AAN.

The copy guy is not a valid source.

"Zman. Makin' chop-pies. Sellin' the business. Z-narino."

Believing any mention from Nortel that they have any bidders for any of the other divisions is like believing they would not be filing for Ch 11 when they said it last year, or that they would emerge form Ch 11 as they mentioned earlier this year.

Right now, Nortel is in surviving mode and at the mercy of whoever may decide to buy them - heck - Nortel may even have to pay somebody to unload their remaining divisions

Nobody wants to buy Nortel's old and rusted technology.

Nortel ! Rust in pieces !

I beg to disagree

do not let NSN spanks on your face.

I think someone with something a little larger than a Z brain could make a very good company out of enterprise. Customers love the product, they only despise the management

anything above a cockroach could qualify. need to be more specific. ;-)

As we witness the rapid decline of their bsuiness, they remain unrepentantly optimistic in defiance and denial of the reality surropunding them to traditionally surprise like they always didn't know better


______________________________________________________________

http://www.networkworld.com/news/2009/020409-no...
02/04/2009
Customers are encouraged that Nortel can emerge from Chapter 11 as a stable, viable supplier with a stronger balance sheet, says the company's Enterprise Solutions President Joel Hackney.

He says the company's plan to restructure its finances under Chapter 11 are on track.

_____________________________


Today... no restructuring... typical Nortel hype hype hype... Who the heck would pay for this kind of stability and forecasting

Hackney = Nortel pimp

Avaya may have a lot of lucent people, but they are run by ex-Cisco sales people. Get ready for daily order commit calls.... :o)

good. but ouch for nortel sales and all those fat bellied business development, marketing etc.

That's probably how the business should be run, after all.

I wonder where an Enterprise deal will leave Global Knowledge's training group? They must be barely breathing in anticipation that a deal would spell an end for their Enterprise business.

Would Avaya take the traniing or leave it with GK?

Opinions?

Why not ask Bryan Pickett? He left Global Knowledge to go with Avaya a while back. Egad! Could Techno Bryan have been... gasp ... a stalking horse?

Milan

Its taken far more than 12-18 months to decide where to relocate a certain training center in NA....

any idea on who is going to buy Nortel's VoIP business?

thanks

Did recent asset sales affect the jobs in Netas? CDMA or etc..

i am not a Netas employee. I own some share in Netas, that's why i am following this blog.

i guess it did not affect jobs in Netas.

as far as i know, Netas does 75% of VoIP R&D of Nortel. That's why i raised that question.

my guess, whoever buys VoIP will probably buy Netas as well.

regards,

In stock market news regarding Netas, it was said that the CDMA deal would affect $1.7 M per year of Netas's software export business.

Thanks,

but, its very minimal compared to annual sales of around US$150 mn. as i said VoIP is the key here.

Netas Mcap is around US$100 mn whereas the company has no debt but US$70 mn cash and US$80 mn worth of land. in addition, 1Q2009 net income was US$5 mn.

these were my main investment points.

all the best,

many thanks

>>> Netas does 75% of VoIP R&D of Nortel.

Nonsense.

thanks for the very explanatory answer :) :)

I'm wondering who will buy the BayStack Ethernet Routing Switch division

Does anyone still buy that stuff?

"Nortel’s top-notch restructuring team"

Now there's a joke if I ever saw one.

they have the bonus to prove it.

I hope you are right Brett5. I dont see anything good coming from Avaya buying it.

Avaya is a bad news........

Bad news for middle and upper management and back office people. Support and sales should be in a better position.

What about the development teams ? I have no remorse for the management :)

bad news to R&D teams from what I heard

There are currently 3 potential bidders for the staking horse position. There is also private equity, late to the game, that will likely be active in bidding after the staking horse is announced. Nortel is still weeks away from announcing a staking horse.

There are also bidders who only want small portions of the Enterprise business.

PM_Guy, you said this yesterday: "Nortel will announce the sale of Enterprise this Friday and will have town halls meetings with the affected sites over the next few days."

how does that go with: "Nortel is still weeks away from announcing a staking horse. "

PM_Guy may be correct. Just earlier this week the deal may have been coming together with closure happening this weekend. Perhaps now towards the end of the week a deal with either Gores or Avaya are both off. Just a hunch.

on: "how does that go with: "Nortel is still weeks away from announcing a staking horse. "

Just means that PM_Guy maintains the perfect AAN track record of mis-predicting asset sales.

As I mention a deal was expect Friday but did not close. It will likely occur within the next couple weeks now.

http://www.theglobeandmail.com/report-on-busine...

Me thinks PM_Guy went to the same town hall I did today.

Some of us out there (still) looking for work (in telecom) have noticed that job ads (in this most major hub that is Nashville) have (grossly exaggerated) spiked, alternately looking for folks with Nortel and/or Avaya PBX-like savvy.

I've yet to qualify for anything above and beyond throwing coax across attics for Comcast, but should the industry itself somehow find a way to simplify, synergize and leverage itself, the current logjam could conceivably break and the qualified people get back to work.

I think there is some truth to that. 6 months ago I wasn't getting much recruiter harrassment. Now I'm getting calls every 2 days or so. Something must be happening.

mostly from panicked customers to keep their nortel stuff until their risks are mitigated. after that they dont need you.

There's some speculation on if Avaya would want Nortel Enterprise Data. They're not a data player today and they have relationships with Extreme Networks when data is required. Nick Lippis had a Tweet yesterday suggesting that the data business could be spun off to what Bay Networks used to be.

I see this as a market share play. Based on the numbers in the Computerworld article referenced, a combined Avaya + Nortel would hold 26.2% global market share for Enterprise Voice compared to Cisco at 14% and Siemens at 11.4%. That is a substantial lead that creates grounding for the expected growth in SIP based systems, Unified Communications and Communications Enabled Business Processes that Avaya highlights on their web site.

Getting to that future position though would see a lot of sacrificial lambs in the Nortel product portfolio. There would need to be strong support commitments otherwise they are inviting Cisco and Microsoft to a competitive showdown.

"inviting Cisco and Microsoft to a competitive showdown" is a joke.
Not even a player relative to the spread Cisco has over anyone bar none.

Even Cisco's John Chambers himself said no one has ever taken over with that great a lead.

good luck

Avaya is not doing that well either. And they are full of ex Lucent people.

I'd think, beyond the technology, the 30k+ Meridian and Norstar customers still out there would be a reason to want Nortel. There are still some major hospitality customer and a lot of Govenment.

That aside, I'm a current user of Avaya One-X... as much as i hate to admit it, a CS1k + MCS is a much better multimedia and conferencing system. I suspect the could get some play with the technology as well.

All in all a pretty good deal for Avaya to combat Nokia and Cisco.

Everything Nortel touches gets torched from their shareholders, to employees, creditors, etc., to now buyers of their rapidly declining business units, considering the time required for the buyer(s) to recover such large investments ...if ever.

It wasn't so long ago Avaya said no thanks to Nortel's offer to buy them instead, now the guppy is turning around and eating the shark. Avaya is already transitioning customers from Nortel for free, do they think there is that much more, let alone worth paying a whopping half a billion dollars for it. As surprising as NSN paying 650M for their CDMA and LTE, well with the assistance of a $100M bank and $300M EDC loan that is to come up with these cash offers.

What would be required to recover the costs of these acquisitions even though Avaya would inherit a by far lower payroll overhead should they only take 200 employees than the 2,500 NSN is reported to take.

It all boils down to whether these deals are worth it for the buyer where I suspect they are not or Nortel would have done something with them by now after so much painstaking relentless effort and enormous liberties extended liberties in able to to do so than trouble dumping them today insolvent and disgraced to continue looting the corpse as fraud trials loom. Do they even know what on earth they are buying with Nortel's credibility and desperation?

Your 'Avaya is only going to take 200' headcount numbers seems unrealistically low. If they are buying Nortel for the Marketshare then they are buying Nortel for Nortel's customers. What's the point of buying Nortel and then firing all of the sales staff that A) has the knowledge of the equipment the customer has and is using and B) [most importantly by the way] has the actual relationships with the people in the customer account that is making the decisions.

If Avaya were to buy it and only transfer 200 employees (which is no where near the headcount of actual direct touch sales reps in NA let alone the world) they would effectively be just buying Nortel to put them out of business and all the current Nortel customers would then go out and start over from scratch. That's not really a wise investment, nor does it make any business sense.

Some woud migrate to Avaya, but you have to think about the fact that aparently the current Avaya Direct Touch Reps are obviously not doing a good job in that account, odds are not in their favor that they would go running to avaya when the Nortel person stops calling. Further, even if the customer migrated to Avaya, they would need more feet on the street to support the larger customer base.

If they are buying for marketshare, which is what the rumours are for both Avaya and Seimens Ent, then the people close to the customer who own the valuable relationships are (or atleast should be) a shoe-in for transfers.

IMHO, the end customer looses if Avaya comes out the highest bidder, Seimens Enterprise is the better fit for the Nortel End Customer.

they need to keep some people for sure. however once they buy the business it becomes global news instantly. a customer with nortel would switch with a swap out of equipment over time. most likely avaya is already touching some of these accounts.

"Your 'Avaya is only going to take 200' headcount numbers"
It wasn't mine, this what made the news.

I don't disagree with the logic of what you are saying than the facts.
I also do not have answers for what you question.

However, I do think $500M is way, way too high ...and even $300M cash would be an enormous gamble in light of Nortels rapid and dramatic decline.

While it is your opinion and you can go to town with it. I don't see how you can say that $500M let alone $300M would be an over payment for Nortel Enterprise?

Consider the fact that Nortel Enterprise is a profitable business. Yes they were down 40% in Q1, but look at the competition, Cisco was down 25% in Q1. You can't look to me with a straight face and say the majority of those numbers weren't due to the general economy. I'd say that to lose only 40% with the economy coupled with the filing for CH11 is a miracle and a testiment to the strength of Nortel products and their sales force.

The biggest problem with Nortel has been their upper level management and the silos of products. If someone came in and cleaned house on these old blood mantra of 'that's the way we've always done it' then the buyer could have a steal of a deal.

One of the biggest sucks on the bottom line to the Enterprise has been the Services portion within Nortel. It's been poorly executed and almost every job ends up costing more money than the customer paid to have it implemented. But if you look at the way things are shaking out, it appears that Global Services is on the block as a Business Unit, while Enterprise Solutions (the actual products[voice, data, etc..]) is being sold as a Business Unit seperate from Global Services.

As with TiC i would also like to see the referenced 'Avaya is only taking 200' article as I've yet to see these 'facts'.

yes they were down 40% but they were down 30% before that weren't they? This was right after Z-Man put his pal Hack in place of a proven veteran that has since left for Cisco

Nortel is burning and tanking greater than market contrary to your indication I can not say so with a straight face, even in this economy

More importantly they are now insolvent for all the difference it makes

Furthermore, they have no restructuring plan but are selling everything they can as fast as they can, a restructuring plan TiC repeated like it was a given or something while speculating on no bankruptcy to begin with. TongeinCheeks also calls critics bashers while he pumped this contradicting dog over the years to this day. I remain amused with some of the posts here and want no part of misleading with intent .

I apologize to readers for the mix up with Avaya and Siemens, as you too seem selectively keen on the Nortel PR while this turd floats. Nonetheless, I appreciate the correction to keep facts and truth straight, at least we "bashers" reply when corrected.

Critics are honest, not usually rude, or mislead with intent to personally attack others judging by one owns unethical actions. I even see strong buy still posted on Yahoo message board to get an idea of the relentless challenge.

Anyways, I was referencing the following article from memory and again apologize for the incorrect reference to Avaya only as a means to straighten out the facts, and not out of any respect as you may understand:

http://www.wirelessindustrynews.org/news-apr-20...

Last month, Nokia Siemens made an unsolicited offer for vital segments of Nortel’s wireless carrier division, including its profitable CDMA segment and divisions handling TDM and VoIP, according to The Wall Street Journal.

If the transaction goes through, it will likely involve the transfer of a little over 200 employees from Nortel. A Nokia Siemens Network spokeswoman declined to comment on the matter.

Acquiring Nortel's LTE R&D division would allow Nokia Siemens access to U.S. wireless carrier giant Verizon, although the carrier already went with Alcatel-Lucent and Ericsson.

I actualy do agree with you completely, well on some level at least. I find that the people who build this company up falsely are just as vile as the upper level management who mislead the public ad drove the company down into the ground.

My point of view in the matter is that at the core, the products and solutions that Nortel offers often gets mixed up with the management of Nortel in these posts of late and it's sad. We all agree that Nortel is a mess with the way it's being ran, and on some level, the fact that it's selling everything off is probably the best thing that can happen. Get rid of the antiquated ways of operation and move on. It's time to thin the structure and get rid of people and their their mini-kingdoms of crappy processes.

Moving to the technology and the solutions, how many vendors can you say the following about? Our voice switch has been running for over 15 years without being touched and never having to be patched. That you can take that same switch and with minimal effort upgrade it to support the latest of applications and capabilities (without a forklift). Or how many data switch vendors do you know that have made switches that can run for 13+ years without major problems. My favorite is this one: Do you know of any Cisco core Routers that the end user has to worry about what happens when the uptime counter reaches the end and loops back to '0'?

All of those things are true of Nortel technology.

And yes I do agree that things are tanking more and more and the longer they wait to move, the worse it will get. The press release that Nortel is seeking external parties to divest the business' has put every Nortel customer in their right mind into a minimum of a holding pattern until a clear buyer has been named, with a vision of where the technology will go.

This was not all directed directly to you, just an over all statement.

Atta boy, you pull out old information that has been proven wrong and attempt to use it as part of your current bashing. And you say that you don't mislead. What a friggin joke.

True or False - The NSN deal to Nortel CDMA & LTE Access includes a transfer of 2,500 people which is 12.5 times greater than the number you try to push in people's faces.

One correction: Global Services is not being sold as a separate Business Unit. Each group is aligning with the respective product they support.

Please provide the news source you claim has stated the 200 headcount number. It will be interesting to see how you have manipulated information yet again in your relentless bashing.

"Could they convert the customers fast enough before they go to another vendor?" Thus spake Zeus... Zeus? Is that his real name?

It is a forgone conclusion that the NT base will eventually migrate to competitive platforms. In the interim Avaya will milk the base for revenue by pricing parts and support services in a predatory fashion. Given this strategy very few Enterprise personnel will find a home at Avaya/Nortel Enterprise.

Milan

Mike said that within 2 weeks we will be announcing our business plan. So, are we waiting for next for the announcement? or he meant CDMA deal as a business plan.

Nortel Business Turnaround Plan

Summary
Sell everything for anything we get

Body
as above

Financials
Enough to cover some debt. Screw EDC and the others one last time.

umm dont not expect more than a "disassembling plan".

isn't there any hope?

I thought there used to be, but I hardly see any hope now

Lots of giants went bankrupt including IBM and Alcatel,however they still exist.Nortel name shouldn't disappear too.

Wipe "Hope" out of the Nortel Dictionary. It is gone!

NO HOPE! That is the final word.