Mike Z.’s ZMail About Nortel’s Enterprise Sale

By Mark Evans | Published: July 20, 2009

Here’s Mike Z.’s e-mail about Avaya’s bid to buy the enterprise business:

Team Nortel:

We are demonstrating solid momentum in our work to maximize the value of Nortel through the sale of our businesses. As I said in my recent video message, we hoped to announce another transaction in this process very soon.

Today, I am pleased to announce that we have entered into sale agreements for our Enterprise Solutions Business with Avaya for US$475 million. These agreements also include the sale of the shares of Nortel Government Solutions Incorporated and DiamondWare Ltd.

These agreements are further proof of the considerable value Nortel’s businesses have in the marketplace. You have built the Enterprise business into a strong player and a valued asset in the industry. With strong customer relationships globally, we are helping today’s enterprises drive differentiation and competitive advantage through deep innovation in unified communications, telephony and data networking.

If successfully completed, this transaction would provide additional clarity for our Enterprise customers, partners as well as employees, a number of whom we expect will have the opportunity for employment with Avaya.

Our Enterprise business is global in nature, and therefore the sale process differs by jurisdiction. In the US and Canada, the agreement is a stalking horse asset and share sale agreement that will be filed with the US Bankruptcy Court and the Ontario Superior Court of Justice.

Like our agreement with Nokia Siemens, announced recently, it requires an auction process that will allow qualified bidders to submit higher or otherwise better offers. There is a separate asset sale agreement for the EMEA Enterprise Solutions business. In certain jurisdictions in EMEA, prior information and consultation with employee representatives is required before finalizing sale terms.

I know you will have questions around the terms of the sale and especially when decisions will be made around employment with the ultimate acquirer. As I explained in my video, we simply will not know these answers until the stalking horse process is complete, a winning bidder is named and certain approvals have been obtained. Once we have more information we will share it with you. For further information, please refer them to the Q&A we have prepared around the agreements.

As for the rest of our businesses, we are working day and night to maximize their value through a sale. The critical momentum we have shown over the last few weeks highlights the attractiveness of the businesses you have built. We continue to pursue discussions with potential buyers for our other businesses and will keep you updated on our progress as further agreements are reached.

Again, the most important contribution you can make during this time is to continue your unrelenting focus on serving our customers and maintaining ongoing operations. Your work now will contribute to realizing the value of these businesses as well as preserving innovation and jobs to the greatest extent possible.

Thank you for all you are doing for Nortel.

Mike


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  • UKNorteluser
    So does this spell the end for the CS1000 range and BCM?
  • tonyrb
    Avaya with Nortel is good and bad.

    http://blog.tmcnet.com/the-hyperconnected-enter...
  • TongueInCheek
    Hey Tony, the Cabletron (now Enterasys) assets you mention in your blog actually belong to The Gores Group, who has the 51% share in the Siemens Enterprise JV. Avaya at one time had a strategic relationship with Extreme Networks but I'm not sure of it's current status.
  • L0L
    "These agreements are further proof of the considerable value Nortel’s businesses have in the marketplace. You have built the Enterprise business into a strong player and a valued asset in the industry."

    Too bad all you six sigma black belt can't figure out a winning strategy with such a "valued asset" for the industry.

    Mike z has become an expert at spinning: like the Titanic, the nortel ship is not only sinking, it is breaking apart but Z and the execs keep saying how great the swim will be !
  • ntlifer
    This is a gift from Nortel to the next owner. Not only are the getting a huge portfolio of products and customers. The CS2100 can be directly marketed into the carrier business, against whoever ends up with CVAS and it's CS2K.
  • FuckMikeZ
    Nortel is down. How MikeZ can say it is good thing for Nortel. As a Nortel poeple, I worked for Nor tel for 10 years, not too long, but longer than MikeZ. We all think it is sad day for Nortel. MikeZ will be the criminal of Nortel even Nortel is gone......
  • painful_truth
    Jobs at Enterprise ---they pick you up.

    http://www.enterprise.com/content/global/siteMa...
  • McBeese
    Question to everyone who participates in this blog: Is there anyone left at Nortel who believes Mike Z has any credibility left and believes these letters are useful?

    My observation is that Mike Z has lost all respect from everyone who isn't riding on his coattails and these emails are useless drivel not worth the power it takes to transmit them.
  • scalppeeler
    Ya gotta remember. Guys like Mike Z don't make millions because they are idiots. They are the masters of the spin zone. They can comment on the devestation of a hurricane and make it sound like a gentle breeze. They are toastmasters and masters of the English Language. Or at least their speechwriters are.
    You really have to read between the lines. For example.
    When mike says how the sale of wireless and enterprise with more to follow
    maximizes keeping employee jobs you have translate it. What he is really saying is that without the sales the place would be liquidated and everyone is out of a job. So even if only 20 to 50 percent of employees survive, they can still say they saved jobs. They just put a bright spin on the saved jobs, without breaking it down to actual numbers. In a sense they are saying. Yes it's bad, but it could have been worse. And in saying that you'd think it was the second coming of christ given the descriptors and adjectives. That's why mike and the boys make what they make. So your question about credibility?
    The answer is who cares. It's all part of the game.
  • Asset_Number_XXX
    One can hardly call the Mikester and his posse masters of the English Language. The emperor is naked and everyone can see it.
  • McBeese
    I care. I'd be much happier if the guy would simply STFU and go away. He is nothing more than an irrelevant irritant now.

    The only updates I want to hear from or about Mike Z from this point forward are when karma catches up with him.
  • S_O_S_This_is_HMS_Nortel
    If it's not for his ego, a dignified man would have resigned from the CEO post long ago. He's in it for the money...After all, sitting in the office doing nothing and getting millions for salary is not too bad in this economy. He won't get any job after this fiasco.

    No, he doesnt command any respect from anyone especially the most important people of all - the remaining employees !.
  • McBeese
    If the guy had sat in his office and done nothing for 3 years, the damage would have been less, IMHO. Unfortunately, he was not doing nothing. He was making bad decisions, hiring the wrong people, and moving forward despite a strategic void.

    If it were only his career on the line, I wouldn't care. But it pains me to think of all the good people - shareholders, creditors, and especially employees - that this guy has seriously hurt.

    Fraud is often a reason to ban former CEOs from leading publicly traded companies in the future. MZ's level of gross incompetence needs to be treated the same way. Perhaps it could be called the Zafirovsky rule so people never forget.
  • ExNtrl
    I would extend the ban to all GE executives. Show me one GE executive that met or exceeded expectations.
  • Still_At_Nortel
    Man.. I love the opening "We are demonstrating solid momentum in our work to maximize the value of Nortel through the sale of our businesses."

    That's the biggest sugar coated turd if I ever saw one.
    He's trying to sell "cut your ball off to loose weight" as solid momentum.
  • GoProto
    "Zafirovski noted that Avaya would assume a CA$28 million ($25 million) loan as part of the agreement. However, they would not obtain receivables or cash and would only get the rights to some of the company's patents"
    -----------------------------------------------------------------------------------------
    re
    article in Business Week today.
    Any comments on these details anyone??
  • less
    So, uh, is MB just going to allow this to happen???
  • GoProto
    Do you mean the vultures - Matlin Patterson?
    I dunno.. what do you think?
    I doubt they're just going to curl up and roll away under a rock somewhere.. What are their options?
  • less
    Aye, what will they think up to screw these developing deals?
  • GoProto
    I don't know, but you can count on NO-Thing going smoothly.
    ;o{ notwithstanding MP. After all.. it is NT, it's management dream team and BoD we're talking about here.. What haven't they screwed up yet?
  • less
    Murphy's Law is truly the only law NT has obeyed to the letter since 1999.
  • believethis
    Avaya buying Enterprise will be a blood bath and the EI lines in Canada just got a whole lot longer. They could have avoided all this carnage but they don't have the intelligence or vision. I'm ashamed to have voted for these clowns.
    Time for an election in Canada.
    High Tech in Canada ... RIP
  • zeroman
    you think an election is going to change anything. who cares about 5000 nortel white collar non-union employees in Canada.

    most of Avaya is offshore now so bye bye employees here. the firesale also ensures there is no money to pay severances or for that matter pensions.
  • scalppeeler
    One thing for sure is harper, clement, mcguinea, manley and other politicians surely DO NOT care about 5,000 nortel non union employees.
    But if you are in any of the groups to follow, well, no worries---->>>
    Auto working nut turner at GM.
    Claim torture and racism as a visible minority.
    Special Interest Group.
    Member of the Arts Community.
    Green activist.
    Multiculturalist.
    Quebecer.
    World Charity Pumper.
    Asylum Seeker.
    Refugee Seeker.
    New Immigrant.
    And here is a little information for the bologna eater who said the scots, italians and irish were all new immigrants one time in Canada and we should remember that when talking about todays new immigrant.
    Listen Up.
    Those immigrants of old came here with nothing and worked themselves to death to survive doing anything they could lay their hands on plus they had to face discrimination and real racism. Wasn't made up.
    They didn't have the charter to make false claims and accusations even if there were any. Contrast that to todays new canadian. Shout abuse with charter in hand at your leisure. You don't have to work hard. Just go on welfare. Seek asylum or be a refugee. We'll build you habitat for humanity house. We'll put you in nice apartment buildings where you can raise a brood. Don't worry if you can't make the monthly payment the government of Canadud will help you and all your kids out.
    A system of stink wrought with abuse thanks to Trudeau and liberalism.
    And people know how to abuse it. They take lessons from others who have abused it so they are well prepared when they land or drive over.
    Oh Canadud.
  • Donn
    I note a distinction is drawn between selling the 'Enterprise business' in North America and Asia vs selling 'Enterprise assets' in EMEA. This looks pretty ominous for Europe based employee's? Or am I missing some of the detail ...?
  • TongueInCheek
    North American bankruptcy law doesn't apply in Europe. I've been searching and haven't found anything that suggests there is a Stalking-Horse like arrangement in European law. An asset sale without a formal auction is a legal course of action in Europe.
  • less
    This is the Way. This is Nortel.

    Dis vos Nortel. Now its Gone Avay, ja.
  • yzanzuri
    Now it's gone Avaya
    Yaron - Nortel Israel
  • less
    Ay, ay, ay, ay,
    Canta y no llores
  • FormerBayGuy
  • less
    "... I am pleased to announce that we have entered into sales... actively engaged in the sale of our businesses. We have determined that the sale of our businesses maximizes value..."
    For whom?
    "If successfully completed"
    If.
    "...this transaction would provide additional clarity..."
    Its all so clear, see.
    "customers I have spoken with have been highly supportive of... transparency..."
    Meaning they obviously saw and heard more than yer average Nortel employee.
    "I know you will have questions..."
    Nah. its all clear to me.
    "Once we have more information we will share it with you"
    How about you just share some of the money for a change.
  • chawk
    strange that NSN said how many employees they were planning on keeping from day 1, but Avaya/Nortel won't have any idea until after the stalking horse process.
  • L0L
    If you consider this cool-headed, there is very little use for any of the Enterprise folks in this deal:
    - the business model of Avaya requires almost no direct sales force
    - huge overlap in product portfolio
    - no need for the LAN/WAN routers, security appliances, etc

    I hope some of the dat aportfolio will be spun off by Avaya, possibly under McHugh's leadership.
  • OneOfTheFewLeft
    All the rumors I have heard seem to suggest that Avaya wants the contracts and teh channel partners, but couldn't care less about the assets or the people. For everyone that is involved, I certainly hope these are just "rumors".
  • nothappyanymore
    it just doesn't matter!!!, even if they plan to transfer some employees to their company, this whole thing will become a complete chaos for enterprise divisions, ( which are around 8000 folks on enterprise + nortel goverment solutions).
  • tryn2makealivin
    The 8K included NGS and the number is weeks if not months old. None the less they are going to randomly layoff people not based on skill, but what they make, who they know(same ole routine)
  • FormerBayGuy
    Cause rumors are floating that they actually only want about 20-25% of them (1600). Not exactly something you want to "announce."
  • broadbandbill
    From the original :).

    “With forceful optimism - we are demonstrating solid momentum to maximize the value - of this world-class asset. By combining our core technology value with Avaya’s high-impact global distribution, blah, blah, blah…”

    If it wasn’t so tragic it would actually be funny. Talk about guys that just don’t get it and are out of touch with reality.

    Mike, take a #u(%ing break or, at the very least, give us one…--bb
  • NTblinker
    we don't acknowledge him as a credible man. But one thing is sure that we are very very close to the MP's bid likely for the whole business. LAST 1 DAY!!
  • Ninjaneer
    Can we all start laughing now? Or is it crying?

    This man would make the Ministry of Truth sound like a good liar. $475M for Enterprise, PEC, and more? "You've made Enterprise a valuable asset" ??

    I think he either bathes himself in self-deceit at night, or laughs while snorting something through $100 bills.
  • ntpurgatory
    Bay Networks purchased in June of 1998 for $9.1B and potentially sold to Avaya for a measly $475 M. Began a long list of Buy High Sell Low moves that lead to this glorious liquidation...
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