Why the Nortel-Avaya Deal is a Bad Idea

By Mark Evans | Published: August 20, 2009

Here’s an interesting read on No Jitter about why Avaya’s purchase of Nortel’s enterprise business is a bad idea. The premise is that two-thirds of M&As fail to create any value, or actually destroy value.

What do you think? Who would be the best buyer for Nortel’s enterprise unit?

Update: The Telecom Blog has a counter-argument on why the Avaya-Nortel deal is likely to succeed.


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  • protosphere

    “big”? oh peachy! wonderful news, is this true! and “many years”! hooray! ogh joy to the happy talk and revalations be known, Long live Nortel and Cisco eat your heart out! How can we doubt you! LOL…

    heh… amazing isn't it…. once then I couldn't fathom anyone being like Ted Bundy either…

    I'm shocked monkeys can type, once then monkeys aren't frauds, and I consider frauds more dangerous than monkeys with a keyboard, if anyone listened to them that is…

  • protosphere

    “It's Not a merger, it's an acquisition”

    how can they merge if Nortel is certifiably dead?

    merging product lines has nothing to do with this, who said merger, shame on them! merger … how dare they!

  • smokeemout

    Awe Shucks GP,
    Sorry to irritate you.

    Have a mojito it's quittin' time

  • joeodonnell

    I may be bending the question a bit…forgive me. But I do believe one should look at the possible “assimilation” well beyond the suitor and target. I pose this question.

    How about from the enterprise customer point of view?
    For 25 years you were either Nortel or Avaya(Lucent/ATT given your vintage). You placed your career in one hand or the other. And now….if you were a NT shop…you are being asked to change colors to the other vendor you have pitted your rfps, mindshare against for maybe…your whole voice career. That's a tough one. Who do you beleive benefits? Especially in this new “logical”, network based, distributed telephony world? Maybe the LAN/WAN incumbent? Not being a commercial either way.
    I think Cisco would benefit the most if it does happen. The POE ports lights are green and ready to be plugged in to. Some people that haven't seen the tenacity of the decade + old Nortel/Avaya dance may not understand that. Again….end customers with PO's have a great deal to do with the outcome of M&A.
    Just my humble opinion.
    I hope everyone is well

    Joe ODonnell

  • scalppeeler

    Just want to say Good Luck to all the current Nortel Employees awaiting their fate in both wireless and enterprise. Just remember at election time Neither McGuinea or Harpo were there for you when it mattered. I guess your only choice is to vote NDP.
    Don't forget who wasn't there when it mattered.

  • scalppeeler

    Makes sense to me.
    The board of directors did everything but direct.
    They sat with their thumbs up their asses nodding like yes men to whomever
    was the CEO at any given time.
    Sweet Job.

  • whatnext4nt

    NT CDMA is a highly sucessful and profitable business – the major revenue and profit engine for NT. Not everything NT is bad. You are just attacking everything NT. This doesn't make sense. You must have an axe to grind.

  • jeffwiener

    @GoProto – Yes. You are right. I should have picked up on that. I added an addendum to the bottom of the post. Thanks for the clarification.

    Jeff Wiener
    TheTelecomBlog.com

  • happyfeets

    good luck again… good luck all… don't let them steal your shares, buy all you can

    now you knock McGuinty like a trailer house polititian who knocks anyone in power

    McGuinty was first to stand up in shock criticizing Nortel for cutting employee severances under bankruptcy protection to appease big business creditors

    do you always bite the hand that fees you? He was on the employees side!

    If you want to laugh at political evil, look at mean spirited Harris or Rae the socialist who robbed the public with legalized gambling, we have awesome leaders in place today with him and our PM as well as in the US. These are great times for ethical leadership we should be thankful for.

  • GoProto

    You are quite welcome.

  • Le_Dude

    Bay Networks wouldn't have made it on it's own. They couldn't afford to invest at the level needed to compete with Cisco. There was a lot of “promise” in the Wellfleet Synoptics merger, just like there was a lot of promise in the Bay Networks Nortel merger. In both cases there was a lack of strategic vision and to much focus on process and internal politics.

    At one point Wellfleet had 50% market share in routing, then Bay Networks happened and they lost all their momentum.

  • scalppeeler

    McGuinea is a cowardly cow towing Anyone But Canadian Politician who has destroyed ontario inside and out bringing in far too many immigrants who go on social aassistance and then vote for him.
    He and Flaherty flatly denied any assistance for current nortel pensioners.
    Pulled the rug right from out under them with that stupid half smirk he has.
    The americans are taking of their ex nortel pensioners.
    If you don't work as an assembler at GM or Chrysler don't expect McGuinea to be interested. And yes I submit rae is even worse than mcguinea. Ray has direct sympathy
    and aspirations to help known terrorists. But we might as well give the NDP a shot. At least their social assistance is good. Might as well put everyone in ontario on the welfare roll. While we are at it let's try for some refugee cash.
    Get educated before you comment.

  • less

    Righto. Searches incl. keywords “Microsoft” and “Cisco” return countless more career opportunities than “Nortel” and “Atari BASIC”.

  • The_Deuce

    Don't worry. Siemens will win. Hackney has already negotiated his new job with them and he will assure they get the favored bid…

  • watching…

    Really? Do tell….

  • GoProto

    What's your source?

  • vvvv

    Avaya and Siemens/Gores must do something or become increasingly marginalized as Cisco and Microsoft take over the market. Bulking up by taking on the Nortel Enterprise product base and selected elements of the product portfolio and distribution structure make good sense. Throwing good money after bad? I don't think so. The world is a large place and there is plenty of room for a strong #3 to Cisco and Microsoft. Whether the #3 turns out to be A or S… that remains to be seen.

  • less

    In other news, Oracle is buying Sun long before it goes bellyup – with shareholder approval, mind you – and:

    “IBM may walk away from this week's Hot Chips conference with bragging rights to having the most muscular microprocessor with its Power7. The eight-core, 45nm chip is expected to set new watermarks in parallelism and cache that could translate into leading-edge performance for servers using it.”

    It looks like evolution is still happening elsewhere in technolofy, in contrast to Nortel's contention that CDMA will still be around for a while and them patents will generate some serious cash well into 2012, so no worries.

  • GoProto

    Based on previous history.. it's probably not a bad idea to believe that the opposite of Nortel's contentions will come to pass.. bet against their paradigm, and you'll probably come out a winner.

  • GoProto

    I guess we are not going to get an answer. Too bad. Maybe it's just conjecture.

  • mrzfantom

    Destroy value? Then Nortel has much expertise to offer…

  • pkake2000

    Thank you for offering a good article I read will come back again.
    http://www.shoppingsaletoday.com

  • DnonAvaya

    I worked for Nortel Government Solutions Defense Sector and was very successful with a raise and a bonus given to me just before the merger in December 2009. Avaya came in and despite a profitable showing of the Nortel SI contracts, Avaya got greedy and to lower their rates, layed off 45% of the work force, including BD, Capture, VPs of Operations, Pricing and Contracts. Well, guess what, now that virtually nobody is there, that area of the business is in question. Luckily I landed a new job at a much better company than Avaya with a nice raise and better benefits all the while with Avaya paying me severance. Thanks Avaya for getting me to the next level in my career by laying me off! LOL! Good luck on getting that sector of the business to work!

  • DnonAvaya

    I worked for Nortel Government Solutions Defense Sector and was very successful with a raise and a bonus given to me just before the merger in December 2009. Avaya came in and despite a profitable showing of the Nortel SI contracts, Avaya got greedy and to lower their rates, layed off 45% of the work force, including BD, Capture, VPs of Operations, Pricing and Contracts. Well, guess what, now that virtually nobody is there, that area of the business is in question. Luckily I landed a new job at a much better company than Avaya with a nice raise and better benefits all the while with Avaya paying me severance. Thanks Avaya for getting me to the next level in my career by laying me off! LOL! Good luck on getting that sector of the business to work!

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