Post-Zafirovski Presentation Thoughts

In the after-math of Mike Z.’s presentation yesterday, here are the basic issues at play. First, Zafirovski is trying to transform how Nortel operates its business. This runs the gambit from the markets in which it plays, being smarter and more focused about R&D spending, a more streamlined, efficient and flexible operating style, and better and faster decision-making. In other words, it’s Corporate Make-Over 101. Mike Z. appears to be doing all the right things to get Nortel headed in the right direction after too many years of operating with a lack of strategic vision and strong leadership. That said, he could do all the right things and still not succeed in revitalizing Nortel. Why? At the end of the day, Nortel could become the more efficient, quick-moving entity with strong management and a clear strategic vision but it will not matter if its technology and services don’t resonate in the marketplace. If rivals such as Cisco, Juniper, Nokia, Ericsson, Huawei and Alcatel have better products and/or better prices, Nortel could find itself spinning its wheels. If Mike Z. wants to come out looking like a hero, Nortel needs to revitalize its technology portfolio and create new tools to attract customers. This is the only way Nortel is going to grow sales and profits.

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