Archive for May, 2006

Rest of ’06 Better for Nortel?

May 31, 2006

RBC Capital Markets analyst Mark Sue expects Nortel to post better results in the second-half of the year, which should help the company see 5% revenue growth in 2006. When Nortel releases its second-quarter results next week, Sue is looking for Nortel to confirm its guidance of operating margins in the mid-teens by 2008 and operational savings of $1.5-billion. Sue has a "sector perform" rating on Nortel with a price target of $3.50. Meanwhile, DonHarrold.net, which "provides unbiased stock ratings for registered investment advisors", rates Nortel a "buy". Harrold’s definition of a buy is that "the momentum indicators I follow are in full swing. I see a "buy" as one that is usually already in the process of trending higher from previously oversold levels."

Nortel Selling Irish Real Estate

May 31, 2006

Nortel plans to sell its real estate in Galway, Ireland for about 28 million pounds, according to the Irish Times. The company, however, plans to lease-back 86,000 sq. feet of space for 20 years.    

Nortel, Microsoft, LG Strike Deal

May 30, 2006

Rich Tehrani has a post on an alliance between Nortel, Microsoft and LG involving WinCE6. The partnership will include R&D and marketing to customers and channels, and a licensing deal for WinCE6. and lead to the launch of new WinCE6-based IP phones and features for corporate and residential users in a few months. The press release can be found here.

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Redback Shares Red-Hot

May 30, 2006

Barron’s has a post on how Redback shares have been surging this year – and how well-known Silicon Valley venture capital firm, Technology Crossover Ventures, recently invested $50 million to buy 2.3 million shares (on the heels of the 1.07 million shares it purchased for $11 a share in November). Last week, Redback stock traded as high as $24.99 – its highest level since it came out of bankruptcy protection in January 2004. Redback is of particular interest to Nortel watchers because there has been active speculation Redback could be an acquisition target. Then again, Nortel purchased Tasman Networks for $99-million so perhaps there’s little interest now in Redback. 

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Irish Eyes….on Nortel

May 29, 2006

Nortel must be back if the Belfast Telegraph Journal deems it worthy of a story.

Wanna Work for Mike Z.?

May 29, 2006

Looking for a challenging work environment with plenty of volatility? Well,  Nortel's looking for someone to work for CEO Mike Zafirovski – not sure if the job means you have to go for long jogs with the marathon-running Mike Z. Anyway, here's the job responsibilities if you're at all tempted (I like the part about "unconventional work hours", which sounds like lots of early mornings, nights and weekends.) : 

Develop content and write speeches and presentations for the CEO of Nortel ensuring consistent and effective communication of key messages
You will need a strategic understanding of the communications process and must be skilled at customizing presentations for various stakeholder audiences – investors, industry analysts, suppliers, and customers.
– Liaising with internal teams within Nortel and conducting appropriate research to obtain the background information and details required for the speeches and presentations.
– Producing and editing PowerPoint presentations and other visual aids for use in speeches.
– Assimilating and filtering the information to ensure the final version is accurate, appropriate and informative
– Drafting and amending speeches as required, often working to tight deadlines.
Extensive travel and unconventional work hours.
– Understanding of the telecommunications and data networking marketplace.
Knowledge/experience/qualifications
– Bachelor's degree in communications, journalism, public relations or a related field
– Previous experience as a speechwriter for executives or other C-Levels
– 10+ years of relevant experience in communications with concentration in speech writing
– Knowledge and interest in the telecommunications industry
– Strategic communication skills
Must have proven persuasion skills and a history of working closely with senior executives.
Good interpersonal and negotiation skills and the ability to work confidently with people at all levels;
– Ability to interpret information and present it in an appropriate and interesting format for the target audience;
Ability to use and manipulate a range of IT packages to present information and data including high levels of competency in PowerPoint, Outlook, Word and Excel.
A team player capable of working flexibly in support of the team and individuals, giving specialist advice on speechwriting issues.
Position reports to the VP, of global messaging, employee communications and analyst relations, and it is based in Toronto.
I wonder what kind of cabbage comes with the job – $200K, $250K plus options plus bonus??)

Asian President Appointed

May 27, 2006

Nortel has appointed 20-year Michael Pangia as president of its Asia operations, which makes him responsible for sales and operations in India, China, Japan, Australia, New Zealand, Southeast Asian and Pakistan. Pangia has worked around the world for Nortel, and done stints as VP for global enterprise operations and services, and VP of finance for Nortel's optical business. The guy must have marketing panache given this quote about his new gig: "Asia is a hotbed for trailblazing technology and I look forward to bringing Nortel's technology innovation to bear in this region."

The Story of Norkia

May 26, 2006

Norkia is the creation of Scotia Capital analyst Gus Papageorgiou, who suggests in a research report there is "great merit" to a deal that would see Nokia fold its networks business into Nortel. The new entity, Norkia, would be 52%-owned by Nokia and would create the world's second largest GSM player behind Ericsson. Papageorgiou believes Norkia could generate $1.9-billion in synergies: $250-million from cost of goods sold, $750-million in R&D, $500-million in SG&A, and $340-million in tax savings. As important, he believes Nokia shares could jump 35% to $28.59 because it would become a pure wireless device maker by spinning off a business with lower margins. Meanwhile, Norkia could jump 93% to $4.58 by becoming a larger, more profitable business than Nortel. Of course, there could be regulatory, cultural and management issues. But Papageorgiou believes Nokia and Nortel have few options other than to pursue a deal. For Nokia, a deal with Ericsson is out because Ericsson doesn't need Nokia's networking business; a deal with Alcatel is out because it's got together with Lucent, and a deal with Motorola is out because it's an arch-enemy in the handset business. This leaves Nortel and Siemens' communications business. Papageorgiou believes Nortel is a better fit for Nokia because it is "the best opportunity to recognize cost synergies and [it] is the easiest to execute". As for Nortel, Papageorgiou said it has to pursue a deal unless it can figure out a way to "prop up its market cap" – something Nortel CEO Mike Zafirovski has failed to achieve since he came on board in November despite the management team he has put together, the confidence he instills in investors, and the strategic plan he recently unveiled. It will, no doubt, be interesting to see what Mike Z. thinks about Norkia when Nortel holds its AGM next month. By the way, Norkia.com is already owned by a pop-up software maker so Nokia and Nortel may have to come up with another name.

New Name for Nortel?

May 25, 2006

About about Norkia? Combine Nokia's networks business with Nortel = Norkia. More later…

Does Nortel Need a New Name?

May 24, 2006

Leo Valiquette, a reporter with the Ottawa Business Journal, thinks Nortel needs to change its name because "Nortel has become synonymous in [Ottawa] with massive job loss, executive arrogance, white elephant real estate and euphoric hype." Who knows, maybe this is something that Nortel's new chief marketing officer, Lauren Flaherty, has on her agenda as CEO Mike Zafirovski works to give Nortel an extensive make-over. It's not such an odd idea given people had little problem when Nortel changed its name from Northern Telecom during the telecom boom a few years ago. Maybe, it can re-brand as NNetworks? Any ideas out there?

More Deets on Mike Z.’s Big Plan

May 23, 2006

There wasn't anything earth-shattering to come out of Nortel CEO Mike Zafirovski's fireside chat yesterday at J.P. Morgan's annual technology conference. Among the more interesting comments included Zafirovski's belief it will take three to five years to fix the company; the wireless equipment industry needs to consolidate – something that would be good for the industry and customers; Nortel has enough market share in CDMA to compete but it does not have that luxury in GMS/UMTS and that discussions to address this situation are taking place; and that by 2008, investors should have a pretty good about Nortel's direction. What makes Zafirovski so credible is not only his track record but how he compares with his predecessors (John Roth, Frank Dunn, Bill Owens). Regardless of whether you believe Nortel can rebound, Zafirovski instills some faith things will get better because he's comes across as a straight-shooter. He has put together a senior management team with little, if any, push-back from the analyst community, formulated a strategic plan and made a few moves to change the Titanic's direction. The wild-card is the competition and the industry landscape, which Zafirovski and Nortel have no control over. If consolidation gains momentum, Nortel may have no choice but to run into the arms of a suitor (Siemens?). If the Chinese suppliers (Huawei, et al) start gaining market share, Nortel may have slash costs and get rid of some business units. If the telecom carriers scale back spending….Well, you get the idea. Nevertheless, Mike Z. is saying all the right things. To hear more of them, check out his presentation today at the Lehman Brothers Worldwide Wireless, Wireline and Media conference.

Another Mike Z. Sighting

May 22, 2006

After speaking at a J.P. Morgan conference today in San Francisco, Nortel CEO Mike Zafirovski will fly across the U.S. to appear at the Lehman Brothers Worldwide Wireless, Wireline and Media conference in New York tomorrow. And who says corporate CEOs don’t work for their money…:)

Can Enterprise Save Nortel?

May 22, 2006

Ever since Nortel bought Bay Networks for more than $9-billion in 1998, Nortel has been adamant about establishing itself as a leading enterprise player. The idea, in theory, is it should be able to leverage its expertise and strong position in the carrier market to attract enterprise customers. The only problem is this strategy has yet to really work. Sure, Nortel CEOs (John Roth, Frank Dunn, Bill Owens and, now, Mike Zafirovski) like to talk the talk about how a new approach will turn things around but it hasn’t happened yet. Owens even trash-talked Cisco by suggesting the market was looking for a viable alternative, which is another way of saying "if you don’t do business with us, Cisco will continue to dominate the market and keep prices high". For his part, Zafirovski seems intent on pursuing the enterprise market. "We do believe we have a real chance to be strong in enterprise," he said last week during a conference call with analysts. "Enterprise is an area we certainly are very committed to." This explains Nortel’s agreement today with Symantec to add intrusion prevention to its application switch family. Maybe Zafirovski will provide more detail about Nortel’s enterprise strategy during his fireside chat today at a J.P. Morgan conference.

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Nortel Wins China Deal

May 19, 2006

Nortel has signed a deal (financial details not disclosed) with China's Ministry of Railways to provide switching centres to enable digital mobile signalling and communications along passenger lines in 20 of the country's 31 provinces. While it's encouraging to see the company do more business in China, the real prize is wireless equipment for the country's 3G networks. Lucent/Alcatel, Ericsson, Nokia and Nortel have been anxiously waiting for the government to unveil its 3G licensing plans. Then, the fun will begin.

Fireside Chat with Mike Z.

May 18, 2006

A week after conducting teleconferences with analysts and the media, Nortel CEO Mike Zafirovski is giving a fireside chat on May 22 at J.P. Morgan 34th annual technology conference. Not sure what it will exactly involve but maybe Mike Z. is finished working behind the scenes to fix Nortel – and now really wants to tell the whole world what's happening.