More Deep Strategic Thoughts

In the aftermath of the Nokia-Siemens joint venture news, there’s all kinds of speculation about what Nortel should do. Upon reflection, perhaps the best move – at least from an M&A perspective – is nothing. Frankly, Nortel still has too many of its own problems to fix before it goes looking to make an acquisition (a challenge given its low stock price and dwindling cash reserves) or a merger (difficult given the overhang of the company’s accounting problems, including OSC, RCMP, SEC and FBI investigations). The pragmatic approach for Nortel and CEO Mike Zafirovski is a straightforward blocking and tackling. Mike Z. has set the wheels in motion for a corporate makeover with a new senior management team, a strategic review looking at where the company can do business, a cost-cutting program, and efforts to put the accounting scandal behind it. If he can execute (and that’s a big if) and Nortel’s bottom line starts to improve, the company could be in a better bargaining position (assuming the stock appreciates as well). Until, then why would anyone want to dance with Nortel given all of its baggage? The New York Times has a story today that suggests Motorola or Huawei could go after Nortel. Interesting.  For more on Nortel’s strategic challenges post-Siemens-Nokia, check out today’s National Post.

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