Archive for February, 2007

Was Nortel Microsoft’s Second Choice?

February 28, 2007

Nortel’s been talking up its unified communications partnership with Microsoft in recent months – part of CEO Mike Zafirovski’s strategic partnership plan. Avaya, however, claims it was Microsoft’s first choice but turned down the opportunity because it didn’t want to license its content control technology to Microsoft. “They came to us to offer that deal and we turned them down, and now they’re coming back to try again,” said Karyn Mashima, senior VP of strategy and technology, told Computer Business Review. That said, it sounds like there’s some sour grapes between Avaya and Microsoft as Mashima adds that Microsoft was asking to license Avaya’s “crown jewels”, and that Microsoft has realized its alliance with Nortel isn’t strong enough to take on Avaya or Cisco. “It’s fine for the Nortel installed base, but Microsoft is getting asked a lot by its customers about the relationship with us.”

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Another Take on Hackney

February 27, 2007

The News Observer’s Barry Saunders has a column on the parking lot/road rage incident involving Nortel senior VP Joel Hackeny, who recently admitted to being guilty of false imprisonment, assault of a female and uttering threats.

Nortel to Demo IP-TV Portfolio

February 27, 2007

You know the IP-TV business is getting serious when there’s an IPTV World Forum happening in London. Of course, Nortel will be there demonstrating “how real-time multimedia and entertainment services can be converged onto the TV to improve the user experience by providing greater control over the home communications environment.” Nortel will also unveil a new partner for developing new TV services.

On the IP-TV front, the biggest news recently was Ericsson’s intention to buy Tandberg TV for $1.4-billion – a 10% premium to Arris’s offier. In a recent report, UBS Securities said Ericsson’s flurry of IPTV deals recently illustrate how serious it has become about the business, although the investment firm suggests integrating these purchases may be a challenge. Of the other big telecom suppliers, UBS said Alcatel/Lucent may have to respond to Ericsson’s move by acquiring encoding/video-on-demand technology, while Cisco is well-positioned. UBS said Motorola lacks edge routers, metro and access technology, Nokia-Siemens’ portfolio does not include encoding/VOD and edging routing, while “NT’s competitive position in IPTV remains weak”.

“While Nortel’s public stance is to compete in the IPTV market, its competitive position is very weak in our view as it only has the Metro transport part of the solution,” UBS said. “While the company could pursue acquisitions to quickly enter the IPTV market, there would be many product holes to be filled in, including Access, Edge Aggregation/routing, Encoding/VOD, and Middleware, making any entry in to the IPTV market tough and likely irrational in our view. We believe Nortel shareholders would not view acquisitions in the IPTV market favorably.”

Update: Accenture recently released a study on IP-TV. Not surprisingly, more than half of communications industry executives believe IP-TV can generate significant revenue within the first three years of service.

Nortel’s PR Dilemma

February 25, 2007

So what should Nortel do from a public relations perspective about the Joel Hackney “incident” (aka parking lot/road rage). So far, the media coverage of Hackey’s admission of being guility of false imprisonment, assault on a female and communicating threats have been limited to a few outlets in North Carolina this blog (the number of page views on the post written on Feb. 22 have been four to five times average daily traffic, while there have been a flurry of comments).

From what I can tell, Nortel has not issued a comment on Hackney’s admission of guilt but there have been sugestions Hackney has directed all media inquiries to Nortel. So does Nortel issue a statement? Or does the company stay quiet while it tries to determine what action, if any, to take against Hackney? Clearly, Nortel CEO Mike Zafirovski needs to figure out how whether the whole thing will quickly blow over, or whether it has the potential to become one of those issues that could blossom into something more serious if Nortel fails to do something sooner rahter than later.

From a public relations perspective, if Nortel chooses to say nothing then what does tha tsuggest to employees, particularly those who’ve written comments on this blog about Nortel’s code of conduct. But if Nortel makes a statement, they risk making this “incident” a bigger deal. I imagine there are some serious PR meetings happening this weekend, which could make Monday an interesting news day. Stay tuned.

Does Zafirovski Keep Hackney?

February 22, 2007

Hackney
When CEO Mike Zafirovski was rebuilding Nortel’s senior management team last year, he wanted to attract high-quality people with strong character, which made sense given the accounting scandal that had engulfed the company in 2004 and 2005. So, what does Zafirovski do with Joel Hackney, senior v.p. of operations and quality, who admitted he was guilty of false imprisonment, assault on a female and communicating threats following a road rage incident in a parking lot after a basketball event last October in North Carolina?

According to the criminal complaint filed against Hackney, he cut off Alicia Ogden in his Audi SUV. When she honked at him, he got out of his car and asked if she had a problem. “He then grabbed the left side of my face,” Ogden said in the affidavit. “I told him not to touch me and he responded that he’ll do what he wants.” (Source: The News Observer) So does Zafirovski keep Hackney, who has agreed to 50 hours of community service and written an apology to Ogden, or does he cut him loose?

Prediction: Hackney gets a slap on the wrist but the incident gets brushed aside as a first-offender, he’s truly sorry, will-never-happen-again kind of thing. Either that or Hackney “resigns” with a nice package.

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Nortel’s New PR Hire

February 21, 2007

Rumours have it my friend, Mohammed Nakhooda, has left Bell Canada to become the newest flack – er, I mean PR specialist – with Nortel. Maybe this will give me a better shot at getting an interview with Mike Zafirovski! By the way, Mr. Z: nice hire.

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Nortel Gets Close to Calix

February 20, 2007

As part of its strategic focus on IP-TV, Nortel has entered into a joint marketing agreement with Calix. (Nortel has had a strategic alliance with Calix). Here’s LightReading’s take on the news:
Like Ericsson, Nortel knows it needs a strong access infrastructure story if it is to be a significant player in the IPTV market, and will likely need to do more if it is to meet its own competitive criteria: CEO Mike Zafirovski is only interested in competing in markets where Nortel can be one of the top two players, or command a 20 percent market share.

Other than with Calix, Nortel hasn’t had much luck with its broadband access partnerships since it decided to abandon the DSL market. Its relationship with ECI Telecom Ltd. (Nasdaq: ECIL – message board) ended in tears, while a partnership with Chinese vendor Huawei Technologies Co. Ltd. broke down before it even got going. (See Nortel, Huawei Kill JV, ECI: Nortel Didn’t Deliver, and Nortel CEO: We Blew It on DSL.)

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So, Will Nortel Cut R&D Costs or Not?

February 20, 2007

The Globe and Mail has an article today looking at Nortel’s R&D operations/campus in Ottawa, which consist of 4,000 people and two Tim Horton’s coffee shops. The story is based on an interview with CTO John Roese (check out his blog), who talks about how Nortel’s need to better focused and more efficient when it comes to R&D, which means reducing costs. It’s unclear, however, whether cost-reductions involve things such as more efficient procurement, or whether it means the number of R&D employees around the world will be reduced.

Nortel CEO Mike Zafirovski has talked about Nortel maintaining its R&D spending at about 15% of total revenue  but the company has also talked about the company being focused and not wasting money on skunk-work projects. And as much as everyone likes to talk about Nortel’s heritage as an innovator, the reality is Nortel is developing and selling new and different projects through joint ventures and partnerships with companies such as IBM, Microsoft and LG. This may mean internal R&D – while still important – can take on a different, more focused role on key technologies such as IP-TV and WiMax.

Nortel Shares on the Rise

February 17, 2007

With little fanfare, Nortel shares have started to gain some momentum over the past month. The stock closed yesterday at $31.62, a 16% climb in the past month. It’s not like analysts have been falling over themselves pushing the stock, although people such as RBC’s Mark Sue are getting a bit more positive.

RBC Raises Target Price

February 16, 2007

According to Seeking Alpha, RBC Capital analyst Mark Sue has increased his price target to $32 from $28 based on his belief Nortel is “slowly starting to turn the corner,” and that the company “has worked steadily to increase its relevance with major customers.” Sue rates Nortel as a “sector perform”.

What’s Nortel?

February 16, 2007

Here’s a concept that I’ve been trying to get my head around recently: what’s Nortel all about these days? Before anyone goes “huh?”, what I mean is what’s Nortel raison d’etre? When you think of Nortel, you think of what? For example, Ericsson is all about wireless communications; Cisco is about routers, switches and, increasingly, home networking equipment; Nokia and Motorola are about handsets. So what’s Nortel about these days? Is it VoIP? Is it IP-TV? Is it Wi-Max? Is it CDMA? Is it enterprise? Is Nortel still trying to be all things to all people?

I’m sure Nortel CEO Mike Zafirovski has a clear idea about how he wants to position the company within the telecom landscape but even after 18 months at the helm, Nortel still lacks identity. “We are Nortel, we’re good at xxxx!” I wonder if this is an issue for customers, particularly customers looking for to buy next-generation equipment such as Wi-Max or IP-TV? If anyone provide a definitive definition of the new Nortel, bring it on.

Is 3G Dead?

February 15, 2007

Nortel CEO Mike Zafirovski said 3G isn’t up to the job of providing a fast enough network to meet the needs of broadband customers. At the 3GSM conference in Barcelona, Zafirovski said HSDPA (a technology that Nortel just happens to sell) is the way to go because it has the potential to have speeds of 14 Mbit/s, compared with 1 Mbit/s for 3G. 3G was also dissed by Simon Beresford-Wylie, CEO Designate of Nokia Siemens Networks, who was also on stage. Of course, 3G is yesterday’s news for telecom equipment makers who need the carriers to start buying new, higher-margin products. I mean, 3G is so yesterday, 4G is today!

Source: Lightreading.

Should Motorola Buy NT?

February 14, 2007

24/7 Wall St.’s Douglas McIntyre writes that Motorola may want to take a run at buying Nortel. With $11-billion of cash, he believes this Motorola could benefit from Nortel’s turnaround and its exposure to Wi-Max. “Nortel’s market cap is $13 billion. Perhaps Motorola could put all its cash to good use,” he concludes.
Thoughts?

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“Nortel is Finally Back”

February 14, 2007

One thing about Nortel CEO Mike Zafirovski, he knows how to talk the talk. In an interview with MarketWatch, Zafirovski proclaimed that Nortel is “finally back’ as it puts its financial books in order and works on putting an SEC investigation behind it. “We just want to be a normal company,” he said, which sounds like a wish as much as a statement.

Some other interesting quotes from the interview, include his belief that Nortel can only rebound if it’s got the right cost structure. “We have a very aggressive business transformation process. Unless you have the right cost structure, you can never control your destiny.”

and that Nortel can start to regain market share again with a new management team in place (not withstanding the fact the company needs a new CFO to replace Peter Currie)
“First who, then what,” he said. “We’re not winning yet, but we have people on board with a track record of winning”.

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Nortel’s 4G Campaign

February 13, 2007

Roese
I’m always fascinating with corporate marketing spin jobs where companies blatantly attempt to position themselves to take advantage of emerging markets with fertile growth potential. For Nortel, these campaigns have gone back forth between 4G, IP-TV and VoIP in recent months.

These days, 4G has become the cat’s meow. In preparation for the 3GSM conference, Nortel put out a press release touting the “4G Lifestyle”. Today, an interview done by ZDNet’s Tom Foremski with Nortel CTO John Roese is another part of the 4G “message” that Nortel wants to deliver to the world. In the interview, Roese said 4G is a radical new business strategy in which Nortel is betting carriers will want to offer higher-speed wireless networks so they can deliver a better Web experience (video, IP-TV) to consumers.

“We realized that for Nortel to be successful, we had to get totally behind 4G,” Roese said. “That’s why we have been selling our older lines of business. We call it our burn the boats strategy. It is what Alexander the Great did when his army crossed into Asia, there is no going back.”

Either Roese is showing off his historical knowledge by citing Alexander the Great, and/or he’s doing some serious playing up to Nortel CEO Mike Zafirovski, who just happens to be Macedonian – just like Alexander the Great. Either way, Nortel has put a lot of chips behind a market where it’s not seen as a leading or dominant player. It’s a huge strategic gamble but perhaps one Nortel has no choice to make if it wants to avoid becoming a second-tier player in the telecom equipment market.

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