Now for something completely different: a U.S. analyst believes Nortel’s inability/failure/reluctance to find a major dance partner a la Alcatel-Lucent or Ericsson-Siemens could be a competitive advantage – despite all the hue and cry that Nortel has been left without a dance partner. Confused? Well, Charter Equity Research analyst Edward Snyder said all the M&A action will leave telecom equipment customers confused over the next year, which will let Nortel steal market said. “A review of the Hewlett-Packard and Compaq merger suggests as much,” he said in a research report. “Low morale on layoffs and spending cuts hurt productivity and eased pressure on competitors. “We’re likely to see the same scenario played out in wireless systems, with turnover, both planned and unplanned, sapping productivity as employees worry more about employment than customers.” It’s an interesting thesis that may be valid in the short-term if Nortel’s competitors have to spend a lot of management time and energy working through consolidation efforts. But in the long-term, post-consolidation, it’s hard to see how Nortel can effectively compete unless it becomes a ultra-focused, ultra-lean supplier. This will mean exiting and/or selling business units, slashing R&D and cutting employees – something CEO Mike Zafirovski has yet to do or spell out yet. (Source for post: Toronto Star)
Nortel’s M&A Edge?