Last Call for Nortel? has a story looking at Nortel's prospects in the wake of the Nokia-Siemens joint venture. There's not a lot you haven't read elsewhere but one eye-catching paragraph is an assertion the only way Nortel can compete with the "Holy Trinity" of Alcatel/Lucent, Siemens/Nokia and Ericsson is to "miraculously grow its company to the same gargantuan scale as an Ericsson or Alcatel-Lucent through a merger or partnership." The story quotes Morningstar analyst John Slack that despite $10-billion in revenue, Nortel "doesn't have the scale to go head to head with these guys going forward. After all, this is a cash-intensive industry that is constantly evolving, and Nortel needs the sales to fund its R&D efforts or else it will fall further behind the pack". The sentiment of Slack's comments are interesting because it suggests the investment community could give Nortel and CEO Mike Zafirovski little time to make a move. The question is how quickly can Nortel do something at a time when it's just finishing a strategic review and poised to start a cost-cutting program? The reality is Nortel may have no choice but to move faster than it wants. Maybe Mike Z. has a strategic vision that includes acquisitions, including Siemens' enterprise business. All this scuttlebutt should make next week's AGM much more interesting.


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