Monday, February 02, 2009

What Does The Future Hold For Nortel????

There are a lot of Telcos that depend upon Nortel - what is going to happen to Nortel and what will happen to their customers?

I think that the bankruptcy will ultimately force the company to re-think eliminating and streamlining a variety of product lines, of course the layoff’s that will follow with those decisions too.

I also think there may be a number or Telco, Network Consulting, Systems Integration and After Market resellers (to fight for what Nortel will lose) in the way of some past to current customers.

There could also be some acquisition of top talent at Nortel in strategic areas recruited to companies like Microsoft (using OCS and Unified Messaging) and other companies that tout virtual workplace solutions with VoIP. Especially with an ever more growing need to go virtual and reduce/eliminate travel costs/time and to consolidate and unify….voice/data/video platforms….to work with older and newer software and hardware.

We will see what the markets will bear and who will be strong enough to make the best strategic plans and how they can best be executed to the field in Q1/2 ’09 and beyond.

Nortel has no future. It will not be able to restructure and rearrange its affairs under bankruptcy protection any more than it was able to do so before.

Nortel is a completely mismanaged company, under a different set of managers, ever since it became a public company. It was the R&S arm of Bell Canada and then spun off. It has never ever produced a profit since it went public. What does that tell you.

Whenever it has faced challenges, it has made knee-jerk lay offs which have never been sufficient. And in order to win business, it constantly underbids, thus never turning a profit.

It will be no different now under current management. The company simply has no management and marketing ability, and its technology is no longer competitive, if it ever was.

So despite all the management blunders, such as Roth's leveraged buy-outs in the dot-com boom era, and the outright fraud by the next CEO, this is an incompetent company that simply does not know how to manage its affairs effectively.

Nortel should and will fail. So will Alcatel-Lucent.

The future in this space belongs to Huawei and other low-cost Chinese producers, with which Nortel and A-L will never compete.

As to their equally-dinosaur telco clients, there is an abundance of supply, and they will obtain whatever they need from Huawei.

This entire industry in USA-Canada and Europe is extremely badly managed, from telcos to gear makers. They have been slow and in great extent have never transitioned to the new world, and many will deservedly fall by the wayside.

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Anonymous Anonymous said...

I 100% agree. I've been watching it for years (as has the rest of the industry). It didn't have to be this way, they chose the path...

9:55 PM  
Anonymous ANGELA LONG said...

I do not necesarily agree. I do think Nortel is mismanaged and I do believe that it will keep screwing itself up. However, it is a very large company and to think it will fail entireley is unrealistic. I think Nortel will continue. In fact, I have several customers with Nortel contracts that tell me everything is moving along very smoothly. Now, as to anything replacing Nortel, I tend to think Avaya will pick up the slack. Not only is Avaya ADA compliant where Nortel is not, it's also offering great deals for Nortel customers to switch over. One must also rememvber that many Nortel customers can get Nortel product on the secondary market, so even if Nortel should fail completely, there will still be Nortel gear available for people who implemented it. I don't know that overseas companies like Huawei will really see that much of an increase in market share because they are clearly not Americans with Disabilities Act compliant, and according to the new government Administration that is going to be a big deal. Just my two cents here.

10:57 AM  
Anonymous Stephen Coates said...

While I partially agree with your sentiment, not all of your statements are factually correct. Nortel has been a publically-listed company for decades, but until the 1990s, Bell Canada had a large shareholding. It achieved profits for many of those years.

That being said, I have found arrogance to be proportional to market share, or at least market share in a company's home market. Nortel's share of the Canadian exchange and PABX market has traditionally been the highest in any major developed country, much higher than Ericsson in Sweden, Siemens in Germany, Alcatel in France or NEC in Japan.

A further twist is that Nortel is Canadian. An article I wrote on the topic, IT in Canada: Hiding the Light Under the Bushell,, may be of interest.

4:57 AM  

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