Mike Z. on the CDMA/LTE Wireless Sale

By Mark Evans | Published: July 25, 2009

For what it’s worth, here’s Mike Zafirovski’s e-mail to employees in the wake of Ericsson’s $1.13-billion purchase of Nortel’s CDMA wireless business and LTE R&D unit:

Team Nortel:

This has been an eventful week for our company. The interest we have seen in our CDMA and LTE Access assets is further proof of what we have always known: Nortel’s people, businesses, its innovations and customer base have considerable value in the eyes of industry players.

Today, we confirmed that Ericsson is the auction winner based on a purchase price of US$1.13 billion. While the auction and announcement of the winning bidder have generated a great deal of interest, I know these events have also caused uncertainty for some of you. That is understandable. We do not have all the answers yet, but there will be GIS’s, documents and websites opening in the coming days which will address many of your questions.

I want you to be assured that we will move rapidly to complete the deal and implement our transition plans. While the deal is expected to bring opportunity to a minimum of 2,500 employees, not everyone will be offered a role at Ericsson. Offers may begin going out as soon as the next few weeks, but it may also take a month or more until opportunities have been closed and selected employees have his or her future role defined.

The final purchase price of US$1.13 billion is clear proof that a tough market has not diminished the value you have all created. Further, it’s important to note that this sale price does not include cash and most receivables and payables, which stay with Nortel.

While today’s auction was a significant step in the overall sale process, work remains to complete the sale. U.S. and Canadian court approvals will be sought at a joint hearing on July 28. There are also regulatory approvals and other common closing conditions that must still be addressed. If everything proceeds as planned, we expect to close the sale later this year. Meanwhile, we remain focused on finding the right buyers for our other businesses, including the conclusion of the recently announced Enterprise stalking horse asset and share sale agreements.

Most importantly, a smooth integration will be key to Ericsson realizing the full value of their acquisition, and therefore the best outlook for those who will move into Ericsson. It’s critical that we continue to service customers and drive our deliverables – our plan assumes that nothing changes in the work you do every day, unless your manager comes to you specifically with a new assignment.

I want to thank you again for helping us move through the sale of our businesses in an orderly and professional manner. I continue to be deeply impressed and respectful of all your many contributions.

Thank you for all you are doing for Nortel.

Mike


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  • NTblinker

    he is laughing!

  • protosphere

    What's this, don't hold your breath amid the hype of Rowe's “celebration”?

    What is worst case scenario? Deal or no deal for creditors?
    Does Chapter 7 in a hand basket remain a distinct possibility?

    What if the Canadian Government who had to subpoena these guys into inquiry and who they left to the court process finally decide that their heavily sponsored technology is to stay in Canada than pay even more to export taxpayers money?

    He didn't mention the Canadian government as perhaps the greatest threat…

    However remote in all fairness, what if the ever so possible snag surfaces… then what?

    “While today’s auction was a significant step in the overall sale process, work remains to complete the sale. U.S. and Canadian court approvals will be sought at a joint hearing on July 28. There are also regulatory approvals and other common closing conditions that must still be addressed. “

    (there may also be Government concerns with this technology he failed to mention)

  • protosphere

    Smirking with a sweat as Rowe is celebrates…

    Nortel's people all keep reiterating further obstacles like some threat looms post a possible theatrics auction in vane.

    Insiders present among all of their bidders, except RIM where I wonder if the turtle will prove wiser than the hare by mooning their anxious court procedures? Or will they challenge them yet?

    Sounds like this is a done deal to me but one never knows with the uncertainty reiterated by all of these guys… I wonder if their powerful lawyers rolling up their sleeves for all of them to reiterate this caution?

  • NortelTragedy

    “This has been an eventful week for our company. The interest we have seen in our CDMA and LTE Access assets is further proof of what we have always known: in spite of an incompetent BoD, the lack of vision and leadership on my part (and let's not mention Hackney's assault episode), that Nortel’s people, businesses, its innovations and customer base have considerable value in the eyes of industry players. It's too bad that I couldn't do anything with Nortel on my watch other than to run a 116-year-old company into the ground, eliminate 30,000+ jobs, devastate uncountable employees, pensioners and their families; and, last but not least, see to it that me and my SLT received bonuses on the backs and blood of others.

    But, hey, we did our best. Keep up the great work. By the way, I'll be on vacation next week in Europe. Good luck in your job search.

  • scalppeeler

    Wake up.
    The Gov't is breaking for summer holidays if it hasn't already?
    They won't be back till October.
    They'll rubber stamp this with lightning speed on tuesday and they they're gone.
    They've done nothing to this point and they'll do nothing in the future.
    I suppose the only payback Canadians can give is to vote NDP Next election.
    Their social assistance programs can serve ex Nortel employees well.
    Don't let ignatieffs comments fool you.
    Cheap Tragic shop talk like manley, jim watson, clement, ottawa city council etc.
    Look at the liberal inaction of his liberal pal dalton in ontario and you
    know all you need to know.

  • protosphere

    I was thinking the same thing.

    A billion is relatively nothing to the many billions they burned and still owe…

    Burned stakeholders, investors, employees, the markets, taxpayers while rewarding insiders exorbitantly over the declining years…

    Powerful pals everywhere as insiders were still visible among every acceptable bidder

    Here they dump what accounted for 80-90% of their declining earnings for around a billion bucks and this is a reason to celebrate, relative to what and for whom?

    Amazing Manleys law firm can defend Dunn legally, amazing they let these American juniors still drive at the wheel into the fast close. What's next, they crashed by screwing up the auction, albeit not likely with their army of powerful lawyers getting paid before creditors like their lawsuit insurance premiums they boosted to $300M.

    It was endless enough already and I guess enough finally became too much, even with their clout after so many years of struggle and printing to burn billions. Lets hope the buyers have better luck… Any news on how the UMTS sale went with Alcatel-Lucent so far? Anyone?

  • protosphere

    yes… the government inaction is certainly disheartening

  • protosphere

    Ericsson profit plunges 56 per cent

    PEC dejas vous? Buying revenues? Hoping for earnings within a year?

    http://www.theglobeandmail.com/globe-investor/e…

    Ericsson profit plunges 56 per cent

    Saturday, Jul. 25, 2009 12:26AM EDT
    Swedish wireless equipment maker Telefon Ericsson'ssecond-quarter profit plunged 56 per cent partly because of restructuring charges and losses in its mobile phone unit, Sony Ericsson, the company said Friday.

    The world's leading supplier of broadband networks said net profit in the April-June period was 831-million kronor ($111-million U.S.), down from 1.9-billion kronor in the same three months last year.

    Sales grew 7 per cent to 52.1-billion kronor from 48.5-billion kronor in the second quarter of 2008.

    Those results were lower than analysts had forecast

    Sony Ericsson, a joint venture with Japan's Sony Corp. (SNE-N25.380.100.40%) , last week posted a loss of $299-million in the second quarter. Chip maker ST Ericsson, another joint venture, also weighed on the parent company's results with a loss of $213-million.

    Once a preferred bidder is selected, bankruptcy courts in the United States and Canada must approve the sale of the wireless division of Nortel, a former Canadian technology giant which entered into bankruptcy protection from creditors in January.

    With 77,000 employees worldwide, Ericsson is one of Sweden's biggest companies and has long been a key global supplier of fixed and mobile phone networks.

  • yes4aapl

    Insiders present among all of their bidders, except RIM where I wonder if the turtle will prove wiser than the hare by mooning their anxious court procedures? Or will they challenge them yet?

    Sounds like this is a done deal to me
    =====
    re
    The deal is done.
    Looks like RIM participated by partners, MatPat.
    RIM $1.100 bill
    ERIC $1.130 bill
    Final!

  • broadbandbill

    Corrected email:

    Team Nortel,
    This has been an eventful week for our formerly great company. The interest we have seen in our CDMA and LTE Access assets is further proof of what we have always known — “but were unable to leverage”:– Nortel’s people, businesses, its innovations and customer base have considerable value in the eyes of industry players. – “It is so unfortunate that the ‘World Classers’ I hired could not find a way to execute on this value for Nortel, its employees and shareholders. However, rest assured I will think of you every time I deposit the bonus checks I receive from this sale. Thank you for all you have done for me”…–bb

  • broadbandbill

    NT,

    Posted my comment (above) before I read yours; great minds really do think alike :) ..–bb

  • yes4aapl

    A billion is relatively nothing to the many billions they burned and still owe..
    ======
    re
    $1 Bill would mean something if they acquired NT CDMA before BK which means all the assets and liabilities, portion of debt, portion of Pension Deficit.
    Bragging about $1 bill now shows Mike Z is probably a sick person who has already forgotten all the pensioners and employees left in cold //not to mention shareholders, bondholders, suppliers and customers with Billion$$ invested in Nortel's equipment.
    Bonus me! that was good line I've read today on this Blog.

  • less

    It would take a true leader to own up and shoulder the blame of failure on proportions as epic as Nortel's. Hm. No such leaders at Nortel.

    A samurai performed seppuku to demonstrate loyalty to his lord by following him in death, to protest against some policy of a superior or of the government, or to atone for failure in his duties.

    What sayeth the modern flunkie warrior?

    “We're rocking the garage sale, dudes! Don't forget to keep up the good work and wave to passersby! Show 'em a little skin and it'll be done in no time. Then you can go home with them. Woohoo!”

  • Zhacknightmare

    1 Word

    STRIKE….

    Those who are severed leave with nothing but the bad taste of the Rewards the Exec team have granted themselves.

    Enterprise will be hit badly, a lot worse than Wireless.

    Cant understand why those who stay accept the actions of Mike Z, Mgmt,E& Y and the BOD.

    As the sale goes forward for approval the power is in the hands of the current employee base to change the way the restructuring is being managed and the way YOU will be treated on YOUR exit.

  • horace_grimswold

    To paraphrase George W. Bush, on the topic of Mike Zafirovski: you're either against him, or you're against him.

  • broadbandbill

    You know where I stand, what's your take? ..–bb

  • tainted_koolaid

    Mike Z's profile on his updated resume –

    “Failed CEO, great at hiring management teams. (away from GE who were supposedly excellent at managing widget, and light bulb supply chains unfortunately proved to be clueless about Telecom, reference Joel Hackney and Joe Flanagan). Failed CEO, excellent at managing compensation. (able to milk millions $$$$ from my previous employer). Failed CEO, excellent at promoting talent. (reference Joel Hackney and Joe Flanagan, despite a Six Sigma failure of unparalled proportions, both rose to the level of President status and compensation, in a mere three years).

  • Zhacknightmare

    Great post

  • NTblinker

    Lastly, Mike had said that “i believe Nortel can be survived.”

    How?

  • less

    Somebody do tell Jim Balsillie that Mike mocked him as “Johnny Sillyballs” or something .The Nortel brass need, at minimum, a gratuitous, non-stop tongue-lashing from everyone – incuding Canadian govt

  • NTblinker

    we are fuckusing our business:)

  • NTblinker

    may be at an advanced stage of this, these guys are proud of what they have been doing for a while.

  • Another_Nortel_Watcher

    Nicely put.

  • AnotherSlave

    We'll all survive Nortel at our next jobs. Nortel itself is as terminal as the brain cancer the BoD and SLT suffers from.

  • Pingback: The dismantling of a Telecom Giant – Poof – Ericsson takes a slice out of Nortel | The Telecom Blog

  • Another_Nortel_Watcher

    I hope I won't have to see that guy's smiling mug at the beginning of Mark's posts for too much longer. It makes me feel ill because of all the unnecessary damage he has done to so many businesses and individuals.

    I think Nortel should be used as a catalyst to put some focus on determining when a government should intervene in the affairs of a publicly held corporation.

    When the executive team and the board are so out of control – but not visibly breaking any laws – what safeguards are there for the shareholder, the creditor, and the employee? None. This needs to change. We do not want government involved with running public companies, but perhaps there needs to be another kind of protection – like bankruptcy – that the shareholders and employees can turn to in situations of complete non-confidence in those running the entity. Call it Chapter 66 or whatever you like. The company would go into protection and an evaluation of the fitness of the leadership would be undertaken by a court-appointed panel of their peers. The court would decide, based on the recommendation of the panel, whether or not the officers would keep their jobs.

    Sigh, I can dream. Maybe I'll write up a case study for Harvard.

  • broadbandbill

    He makes it all so too easy..–bb

  • GoProto

    “The company would go into protection and an evaluation of the fitness of the leadership would be undertaken by a court-appointed panel of their peers. The court would decide, based on the recommendation of the panel, whether or not the officers would keep their jobs.
    ———————————————
    re
    Great idea-Mental health evaluation too. But i am not sure about the panel make-up-of their peers, meaning who? Other insiders of the same company will not be objective. i think a panel who deals with BK situations and mediation processes but what such entity exists?

  • forgive

    Creditors and common shareholders may give M.Z and his executives some decent credits in a sense that NT business unit sale DID go very well.

    Final price of LTE/CDMA is almost doubled of original offer of NSN's 630M.

    I won't be surprised to see NT common share holders may have more values which they never expect.

  • GoProto

    “On Thursday, ahead of the company's quarterly earnings release, Bezos posted a message on Amazon's Kindle Community blog apologizing for the way Amazon handled the matter.

    “Our 'solution' to the problem was stupid, thoughtless, and painfully out of line with our principles,” he said. “It is wholly self-inflicted, and we deserve the criticism we've received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission.”
    ————————————————————————————————–

    Above is how a true leader deals with mistakes. With honesty, integrity and taking responsibility. And this comment from Amazon's CEO was regarding one, just one minute thing they screwed up-not the major downfall of a 115 yr old company . I hope Z and Hack never get their sticky hands on another company for the rest of their lives.

  • GoProto

    I highly doubt it. think about what you are saying, which I could hardly believe what I was reading..they don't deserve one single accolade for anything, sorry. Do you really believe they deserve credit for the final bid amount? Name one thing they did that allows them to take any credit for it.
    not to mention, it ain't over til it's over, and nothing is a done deal yet, they still have time to screw it up.

  • Theleftbehind

    I really wish you mike that you get sick and die soon. I really do.

  • yes4aapl

    Creditors and common shareholders may give M.Z and his executives some decent credits in a sense that NT business unit sale DID go very well.

    Final price of LTE/CDMA is almost doubled of original offer of NSN's 630M.

    I won't be surprised to see NT common share holders may have more values which they never expect.
    =======
    re
    are you watching the saga?
    What you are talking about?
    Don't make me sick.
    First, it was MatPat protesting Nortel's idea of rigid $650 mill.
    second It was Rim's protest of Nortel's ethics to bid low…
    It was RIM who lifted the price to $1.1 bill and ERIC outbid that by $1.13 bill.
    Do you understand my English and simple math?

  • yes4aapl

    the main idea of BK protection is to keep creditors away and do the restructuring in the best interest of creditors!

  • aution_watcher

    Good to see that the bidding process did what it was designed to do… maximize the value of the business unit (BU). Ericsson is paying close to twick the stalking horse value offered by NSN.

    HOWEVER, this result just goes to prove that you CANNOT trust what comes out of the mouth of a corporate executive… they WILL lie to cover their true intent. Below is a quote from Ericsson's new CEO, Vestberg, as stated in an interview with Bloomberg, implying they were not interested in bidding on Nortel assets:

    “Ericsson has “a belief that organic growth is best” and it hasn’t bid on any assets from bankrupt Nortel Networks Corp., Vestberg said in an interview with Bloomberg Television.”

    http://www.bloomberg.com/apps/news?pid=20601085…

  • forgive

    I don't care whether RIM or MIR raised the price to $1.1B. The fact is NT as an entity got much more money in NT's account than expected, right? This is of course good news for creditors and shareholders. You still down play my play on NRTRQ.PK. Open your eyes on the market in the coming weeks, Man.

    I know M.Z made most of people sick from the perspective of how he did on this ever-great company. However I won't use any ego or emotion to analyze what market could react.

    1.13B (most of cash) did upset you, right? I told you NT is undervalued at least in the pink market. Now it is time for creditors, shareholders (pink share holders) and wireless employees to have a drink and cheers.

    It won't take complicated math to tell the rise percentage of pink share. How much will the gain be from $0.05 to $0.15?

  • forgive

    Capital market is more complicated than engineering work. 630M to 1.13B, eh?

    Someone may say there could be some conspiracy in RIM's role here. I can bet no one will ever know what really is going on. People who knows or behind this will never tell the truth in the public.

    Who is behind this? It is Wall Street. It is Wall Street who printed money and make Telecom super “hot” in late 1990s. It is also Wall Street playing such capital game. M.Z, RIM, M.P and E/// are just actors in this show.

    From actor perspective, M.Z did “good” job to make this happen and make their common big “BOSS” happy.

  • sha_from_israel

    does it mean that in monday the nortel stock will rise above 1$ ???

  • Another_Nortel_Watcher

    Peers means directors from non-competing companies, like Verizon, HP, RIM, etc.

  • Another_Nortel_Watcher

    My point wasn't about bankruptcy, it was about a bankruptcy-like process. Read it again.

  • The psychiatrist

    When the executive team and the board are so out of control – but not visibly breaking any laws – what safeguards are there for the shareholder, the creditor, and the employee? None. This needs to change

    ANW,

    you raise a very important point however nothing is” black and white” anymore ,it's all about they grey areas and these people who have lead Nortel into the pathetic state it has become have knowingly operated within those grey areas of which as you speak have not broken any laws.

    Undeserved compensation will always flow to people who are in management type positions such as Mike and the rest of his hirees regardless of their true performance because when your at the top there isn't anyone to really challenge whether or not they are deserving of their board approved compensation.

    Nortel shareholders have paid Mike Zafirovski $30 million for what amounts to a mission never accomplished.

  • GoProto

    oh, yes that would work perfectly. Thanks.

  • GoProto

    Sorry, i respectfully disagree. There is no “job” MZ did at NT that I could, or would EVER call “good”. And once again, he, and other execs had zilch to do with the final bid outcome. If NT CDMA/LTE came in with a bid of that amount- then the employees busting their asses for years- and actually (unlike MZ) doing the job they were hired to do successfully deserve the credit for the bid of 1.13B, as well the Share holders investing their money. But what did they get? Fired, with no severances/pensions in many cases, and shares virtually worthless in past comparison -and yes they did expect more.

  • yes4aapl

    I really wish you mike that you get sick and die soon. I really do.
    Theleftbehind
    =====
    re
    It's sad, isn't it?
    but you have to accept some basic rules, he was/is your boss.
    give him more time /1 month/
    Would you be able to take over the CEO role?
    If yes, just wait.
    I believe there will be many new opportunities to replace the old boys.
    You said

    “Mike: We presented you a viable plan for Nortel in 2006 and you just ignored it”
    Can you tell us a bit more about that , after all is lost?
    Is there any chance MatPat or others can restructure Nortel /if given such opportunity/?
    You knew him very well, didn't you?
    The private life should be separated from the business actions. just my opinion.
    Kids need fathers and wives need husbands….
    cuts on jet fuel made it even more complicated for him than it was…
    God bless those who are patient and forgiving!

  • Milan_Bekich

    Na Sha. Maybe one agorot on Monday.

    Milan Ben-Kich

  • yes4aapl

    This is of course good news for creditors and shareholders. You still down play my play on NRTRQ.PK. Open your eyes on the market in the coming weeks,
    =====
    re
    Sorry I did not remember you are the player on PK sheet stocks.
    I don't follow plays on PK In my opinion you have better chance to win at casino….simple math!
    You can find my post_replay to you pretending you have 80000 and living in Israel…
    yes
    NT on pink can go high before total return to Zero as there is no talk about “real shareholders” anymore…
    There are no shareholders in the Big Picture
    So in conclusion
    I am surprised a shareholder replayed to my post…
    That's the beauty of this blog
    Thank you and I wish you luck, holding my fingers crossed that you know what you are doing
    No bad karma pls…

  • sha_from_israel

    i home five agorot !!!

    but realy what do you think ?

  • yes4aapl

    Post for Mark Evans
    There is 2 people, as you noticed
    me and Proto
    We have been chosen by universe to know everything about Nortel
    For your information few years ago I was not able to write English
    and bum
    The lightning stroke me and Proto /2 months later/
    The Psychiatrist posting on this Blog is my witness
    I wasn't at the bidding and I saw Sue S bumping against theleftbehind with their laptops connected to the internet in the lawyers office…
    If I told you that I worked as a laborer now you would never believe me, would you?
    God sent me there to meet real people, the salt and gold of that universe
    real people not the actors in the stock markets.
    I feel blessed.
    btw
    I visited the WallStreet the other day… the Golden Bull /have pictures/
    and I understand mow why universe sent me here to your Blog, to make traffic and upset that guy, what was his name, TiC?
    He is a crook!

  • yes4aapl

    Due to rising costs of metals and minting, a five-agorot coin actually costs the bank 16 agorot to produce

  • yes4aapl

    message for the Psychiatrist
    Call me
    write to me
    the synergies of you and me are strong
    I love your family
    I would piss in snow with you
    NoTell!
    Say Happy Birthday to your papa!
    65?

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