Nortel Enterprise, Anyone?

By Mark Evans | Published: September 4, 2009

It’s September 4: three days before Labor Day, four days before the kids have to go back to school, and, oh yeah, it’s the last day to submit a bid for Nortel’s enterprise business.

So, who wants in on the action?

Siemens Gore? Word is you’ve got a bid burning a hole in your pocket. Let’s see what you got?

Cisco? Any interest?

MatlinPatterson? Was the purchase of a 65% stake in Skype by private equity investors (including a $300 million investment by the Canada Pension Plan) mean the M&A market is heating up again, or was that an aberration?

Come on, folks. All we’ve got so far is a $475-million bid from Avaya. You do better than that? We’re talking about a $2.8-billion business in 2008. Sure, sales are crumbling as customers flee amid Nortel’s bankruptcy protection process but there’s still some good stuff here.

Anyone, anyone?

For more, check out the Financial Post. As well, the Ottawa Citizen has a story looking at the process.

Update: Anyone expecting to learn about bidders today other than Avaya will be disappointed. On Twitter, Nortel said: “Don’t expect a Nortel PR today announcing other Ent bidders, not required. Remember it was the bidders that did that with the CDMA/LTE sale.”


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  • borissss

    I miss reading good news here.The title of the page should be changed to “All the sad news about Nortel Networks.”

  • Moose_Chaser

    BORISS THE SPI-DER !!!!!

    Sorry, I just HAD to do that !

    MC

  • michaelmcnamara

    Any thoughts about what you might do with this blog after the announcement on September 11? I believe the domain allaboutavaya.com is available?

    I'm guessing you have a few ideas but will probably keep them to yourself till after the September 11 announcement.

    Cheers!

  • drgordonfreeman

    The blog will still be about Nortel, just Nortel minus Enterprise. Even at that, it will likely be several months before the integration process is completed, Enterprise is absorbed by the new owner, and finally “goes away” (in name at least).

  • zeroman

    Siemens yes. Cisco no way. MP will not be able to win it. They still have all those rock star ex Nortel executives.

  • bankrupt_bob

    <<…it will likely be several months before the integration process is completed…>>

    More like DISINTEGRATION!!

  • yes4aapl

    Any thoughts about what you might do with this blog after the announcement on September 11? I believe the domain allaboutavaya.com is available?
    ====
    re
    Nortel can be finished but the Nortel's story will continue.
    We are about to enter SEC vs Nortel's managers trials plus criminal trials in Toronto.
    Stay tuned
    http://www.sec.gov/litigation/litreleases/2007/…
    http://74.125.95.132/search?q=cache:gDgyyqGGREU…
    cut
    His management style was gruff and
    he was known to lash out in anger at employees who did not establish sufficient reserves.
    cut

  • protosphere

    465M less 30% = 325M Q3
    325M less 30% = 227M Q4
    227M less 30% = 159M Q1
    159M less 30% = 111M Q2
    111M less 30% = 78M Q3
    78M less 30% = 54M Q4
    54M less 30% = 38 M Q1
    38M less 30% = 26 M Q2
    18
    13
    9
    6
    4
    3

  • protosphere

    oops hit the post button before the coffee kicked in…

    was also meaning to mention Mat-Pat can not possibly bid the value up enough to cover the new $3B tax liability

    this unit Avaya bid 475M for, even if it fetched a multiple like the 650M that went to 1.13B from Siemens to Ericsson…for 1B would still not cover this taxmans lethal blow of $3B for secured creditors alone let alone rest

    (the taxman) dealt this lethal $3B blow…

    has anyone done the math to see what is left after calculating what they may sell MENS and LG at best?

    If they had 12B debt how much will be left after legal costs etc…

  • zeroman

    800 mill maybe. creditors are screwed.

  • zeroman

    yah you should have coffee. its not going to tank 30% every quarter. maybe 5 or 10% until it stabilizes

  • TongueInCheek

    Didn't their Enterprise Revenues see a quarter-over-quarter increase between Q1/09 and Q2/09?

    The entire Enterprise market, not just Nortel, is down approx. 20% year-over-year. It's a tough market but as the economy settles and starts to grow again then there may be some improvement.

  • brett5

    The bidding door has now closed as of 12:00 EST. So who are all of the bidders?

  • GoProto

    yes4 you are right. The fraud trials will be years in the making, so hunker down worker bees and keep the brew on (coffee or beer, your choice…) cuz it's going to be one long fascinating legal yarn that keeps on spinning..

  • GoProto

    Dumb & Dumber still…

  • protosphere

    http://en.wikipedia.org/wiki/Frank_Dunn

    Dunn was known as a blustery and antagonistic individual with basic accounting skills but no finance skills whatsoever.

    ______________________________________________

    Dunn was a totalitarian. Road rage Hack was also a shoe in with his management style. What is it with these guys, even Skilling fired the lowest percentile annually. Type A personalities without compassion are literally psychopaths. Clinicians in health they seek to emulate don't suffer from this, sometimes borderline and sometime not, criminal infliction.

    Dunn was reiterated to be a harsh (“gruff”) and “antagonistic” lowly accountant who's mission was to defraud for bonuses so this far from destitute fraud pig at the trough could buy his $8,888,000. Oakville waterfront mansion.

    He held close relationships other tyrants to keep up with the Jones' yet he was just a deceptive accountant who climbed the ranks to first time CEO too.

    How could the dream team albeit crooked board have anything to do with him aside from money if this isn't the sole answer. Denying obvious red flags only to roll over on him amid Nortel's reluctance to chase past officers with so many still there. Heh…only in Canada.

    … then Dunn went on to consult in Ottawa as a high profile board member's law firm defends him in a country renown for open season on the investor…

    The company never did repair their actions to say the least, instead they seemingly deflected the past or hysterically extended this gross lack of credibility, contradiction, etc., to maintain their interests right to the very end when they liquidated.

    It has been years since 2004, where is the justice as he walks a free man with powerful legal counsel… it is not like he is the attorney general or something and he drove by far more victims into the curb for money

    If you have a high profile defendant in North America, they never go to jail as an immortal god…heck they get away with murder… literally, aside from OJ… and they never did catch Jack the Ripper…

    Scary that history was not written by the losers, …heck, even Germany issued rewards to link any Germanic association to the holy grail during the holocaust …ironically as board members trade their options for cash of all things before increasing lawsuit insurance and no brows raised by the sheeple led to slaughter any more than their good employees went on strike to save severances and pensions before they sold it all. =)

    The injustices strike me as endless…

    Something terrible happens with inaction…. nothing!
    And Canada is a posterboy for just that as fraud pays, big time, huge. Better than the OLG lotteries… =)

  • protosphere

    Maybe you guys are right, or maybe it can tank even greater with all the new players cropping up weekly.

  • justwonderingaboutgps

    Any news of layoffs in the enterprise support, engineering?

  • protosphere

    Their sales historically fluctuate quarter to quarter so comparing Q2 to low Q1 is not a good indicator.

    However, you are right the blow wasn't as great as anticipated (but I question by what reliable numbers as these far from credible rats abandoning a sinking ship are sued for misleading and ready the units for sale ASAP)

    This may be a better indicator:

    “In the second-quarter, sales dropped 28% to $465-million from the same period in 2008.”

  • protosphere

    Also,
    “If they had $12B debt how much will be left after legal costs etc..”

    Does this make it $15B now with the recently added $3B tax liability?

    I have not heard any mention of their aggregate debt with growing list of creditors as their assets dwindle quickly.

    Creditors are indeed getting increasingly antsy yet again =) The bad news is non-stop for Nortel. The very Nortel name is badly stigmatized in every conceivable way.

    I can just see everyone throwing out their Nortel equipment from tall buildings like the olf SCTV comedy of throwing out their televisions. Another good analogy might be Monty Pythons accountants jumping =)

  • cool_goose

    reliable sources confirmed that there are 4 other bids for enterprise !!

  • NT09

    why don't we see any? shouldn't the bidding process be made public at this point?

  • NortelEngineer

    Is ur reliable source same as ME?

  • zeroman

    agree on the Nortel brand. the most tarnished of all. 3 CEOs who started it all. The brand never really recovered from 2000 and has been plauged since by one thing or the other.

  • zeroman

    surely they would have given you some names too.

    Avaya
    Siemens
    Mattlin Patterson
    Juniper maybe?

    Who could the fourth be? Unlikely Cisco, Alcatel, 3Com or Mitel would bid.

  • zeroman

    so 475 million
    485 million
    495 million
    500 million

    then bidding so 505, 510, 515, 520 … 605, 610 … 700 … 800 sold to Avaya.

  • zeroman

    Hackney must be salivating. Chance for CEO or COO role at Siemens. Z cold join the party too.

    http://blog.tmcnet.com/the-hyperconnected-enter…

  • GoProto

    In that case, Siemens should plan on tanking in 12-18 months. It won't take as long to tank as it did for them (Zhack) to do it at NT, since now they have one under their belts and are “experienced” Recognized Losers.

  • chawk

    Apparently it's up to the bidders to announce that they've bid. Nortel's not going announce bidders.

  • NT09

    hmm…those bidders are quiet! (5 of them according to some “reliable sources”)… is the winner to be announced by end of the day today?

  • GoProto

    That's what happened with CDMA/LTE, the bidders announced , then some time later NT did their PR

  • GoProto

    Winner? Auction is Sept. 11 in NYC.

  • zeroman

    If Siemens ends up buying Nortel, I think these two will try and get in for sure. Very strong chance.

    Remember they thought Nortel should focus on Enterprise weakening it on other fronts. Maybe it was a strategy from the beginning. Get the Nortel incumbents out. Get to Chapter 11 and then take out a piece making millions down the road.

    This maybe the play that got the existng Siemens Enterprise CEO ousted.

  • GoProto

    So when you say 4 other bids, it's 5 total as in other than the Stalking Horse?

  • zeroman

    hmmm symbolic think about that date for a moment.
    . 911 for whoever buys Nortel Enteprise.
    . 911 million for the business.
    . will they keep 911 jobs.
    . 911 days to Capter 11 for the new entity
    . the business tanks from 2 billion to 911 million
    . since its VOIP maybe no 911 to call for bailout $.

  • GoProto

    You would think any company would be embarrassed to have them on board. One is a no-talent assaulter of women, the other is a clueless ex-CEO, ex-GEnius who never had the vision to see when and where to change course, never accepted anyone's advice, ran straight off the road taking everyone off a cliff with him.

  • GoProto

    It's enough for me to think about being in NYC on Sept. 11th.. for any reason. :~(

  • GoProto

    Me thinks there are five, 0~man

  • TongueInCheek

    From Twitter:

    Nortel Networks confirmed Friday it has received at least two additional bids for its Enterprise business unit, which sells communications systems to corporate customers.

    Source: http://calgary.cityandpress.com/node/168295

  • NT09

    wish you don't have to be there;-)

  • NT09

    that link dated Thursday (Sept 3) not Friday

  • NortelEngineer

    All the best to Simens AG for Sept 11

  • NortelTragedy

    The Germans are smart, they won't GAMBLE with Hackney … he's a loser and everyone knows it.

    This is a good article from the past, illustrating just how trusting Z or Hackney is a TOXIC RISK.
    _________________________________
    Betting on turnaround

    Joel Hackney had a hand in shaping the future of Nortel Networks even before he agreed to take the top job at the multinational company's third-largest site, in Research Triangle Park.

    Hackney was nearing his 15th anniversary at General Electric last summer when his buddy and former GE colleague Mike Zafirovski turned to him for advice on accepting the chief executive slot at Nortel. Zafirovski was not only seeking guidance on a risky career move; he was also putting out feelers on the caliber of team he could assemble to run the floundering telecommunications giant.

    So after Zafirovski agreed last fall to take on the challenge of fixing Nortel, Hackney was one of his first recruits.
    As senior vice president for global operations and quality, Hackney, a Chapel Hill native, oversees 10,500 Nortel employees globally. He is in charge of key programs in the recovery strategy for the Canadian company that makes communications equipment for phone and data providers.

    Hackney, 37, is one of 18 executives on Zafirovski's cabinet — half of whom, like Hackney, were recruited from outside Nortel. The RTP team is leading Nortel's global business transformation project, a multiyear undertaking to get Nortel's spending and decision-making in line. At any one time, between 200 and 300 Nortel employees globally are assigned to the corporate overhaul, with most based at RTP.

    For Hackney and the other members of the management team, Nortel represents a calculated gamble with a huge potential payoff. The company has been a whirling turnstile for corporate executives who begin with optimistic talk of ethical reform and end with an ungraceful exit. A successful recovery for Nortel would mint Zafirovski and his team as turnaround rock stars.

    “This is a once-in-a-lifetime opportunity where you can write your business case,” Hackney said. “I really think if we can make it happen in three to five years, we'll be on the cover of Fortune and every business magazine — all of us will.”

    But not everyone is convinced it will be easy.

    “The new leadership is designed to remove the taint of past management, a taint that remains with the company still,” said analyst Jim Kelleher of Argus Research, a financial research firm, in a recent report to investors. Nortel “is more at risk of ceding further market share than in position to gain share, and it has yet to demonstrate it can operate effectively in the brand new world of cutthroat pricing and ephemeral customer loyalties.”

    To counter such concerns, both Hackney and Zafirovski, disciples of legendary GE boss Jack Welch, want to imprint GE's unremitting management philosophy on Nortel's corporate culture.

    Taking a cue from Welch, Zafirovski has declared that Nortel will focus on lines of business where it is first or second in market share. The company is applying a statistical methodology institutionalized at GE to reduce the likelihood of product defects. Nortel is reviewing internal procurement processes in an attempt to save millions of dollars on contracts with vendors and manufacturers. And it wants to expand into providing more networking management services — RTP is home to one of Nortel's three global networking operations centers — instead of just selling networking hardware.

    Hackney said he left GE because he wanted the opportunity to work with Zafirovski again and to play a role in restoring Nortel's reputation. The downside, as he saw it, was that analysts and investors would demand instant results, whereas he and Zafirovski realized the recovery would take three to five years.

    Still, Hackney does not show a hint of doubt about his move.

    “If you look at my life, it's as if it was being built for this [Nortel] job,” he said. “My story is not unique in the sense if you look at the recent additions to Mike Z's cabinet. We all left great careers and huge opportunities to come here.”

    He spent his first 45 days getting feedback from employees, customers and investors. Now Hackney says he divides his time between global strategy and product delivery, daily operations and product quality, and assessing employees and developing talent.

    He says that while there's no excuse for Nortel's accounting scandals and financial restatements, the company's biggest problem has been its inability to rebound quickly from internal problems that aren't unique to Nortel.

    He attempted to address that when he arrived at Nortel in December by distributing a list of his personal values to all employees.

    It implicitly hit on many points that have plagued Nortel's corporate culture, chief among them:

    * people who make promises but don't deliver,

    * political or hidden agendas, and

    * a victim mentality.

    Some employees recently saw how seriously Hackney takes those values, said Don McKenna, another Zafirovski hire from GE.

    Hackney wanted them to plan a business strategy that would yield certain results. Their answer — this just can't be done — wasn't the one he wanted.

    “He spent 20 minutes listening,” McKenna said. “Then he said, 'Come back in six hours. Tell me what we have to do to get to [our goal].' “

  • GoProto

    Hackney said he left GE because he wanted the opportunity to work with Zafirovski again and to play a role in restoring Nortel's reputation
    ——————————————————
    Oh right, I forgot Hack was a GEnius too..

    WOW! Great restoration job.. these two couldn't restore a basement much less a corporation's reputation

  • yes4aapl

    WOW! Great restoration job.. these two couldn't restore a basement much less a corporation's reputation
    —-
    re
    They are despicable liars and crooks.
    How Mike Z would say he will be a CEO once again?
    He deceived all stakeholders including shareholders, creditors_bondholders, employees(including pensioners and LTD)….and so on. The list is endless like Proto used to say.
    How Mike as a new CEO for another company can approach new creditors to borrow money?
    The new employees would run away from him just for own safety reasons…
    What was that BS Mike stated for when he was quitting Nortel's CEO position?
    I hope FBI will investigate why he lied to the public so many times and loaded money into his pockets when the company fell into BK and disintegration?
    yes4aapl, long time critic of Nortel's culture.

  • NortelTragedy

    “Hackney must be salivating.”

    Basketball season is upon us :-)

  • GoProto

    “What was that BS Mike stated for when he was quitting Nortel's CEO position?”
    ————————————————
    Here's what I think- he quit before the sh*t hit the IRS 3 BILLION DOLLAR TAX FAN.
    Add frickin' insult to injury, the lies keep piling up faster than a club sandwich. The Recognized Losers.. from Centers of Excellence in Fraud.

  • PM_Guy

    It looks like Cisco will be a bidder. They have the cash to out bid the others. They can gain market share and keep the lead. It will keep the customers out of the hands of the remaining competitors.

    The obvously does not need the Data side of the house so they will either shut it down or spin it off due to DOJ concerns.

  • beenawhile

    Are you speculating or speaking from knowledge? I would be surprised that Cisco would be interested.

  • Lookahead

    Any company wants to buy would need to ponder that they can gain market shares but Hankney is a poison pill.

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