So What Next, Mr. Z.?

In the wake of Nortel’s decision to eliminate 2,900 employees over the next two years to save $400-million in operating costs, one question that still lingers is what Nortel wants to be when it “grows up”. Despite some asset sales (the UMTS business to Alcatel, the sale of the blade server division to U.S. investment bankers, etc.), Nortel is still a company with diverse operations, although probably not the all things to all people supplier that ex-CEO Frank Dunn was so keen on nurturing.

So, what does current CEO Mike Zafirovski do now that it appears the foundation work is close to be finalized? Does he make an acquisition? If so, how big does/can he go? Does Nortel stay small and strategic, and make $100-million acquisitions akin to the deal for Tasman Networks? Or does it go big to establish a leading role in the IP-TV or enterprise markets?

During a speech in Ottawa yesterday, Zafirovski talked about his six-point program, which features “profitable growth”. The sixth guideline, he said, is Nortel wants to target major markets. “I’m not interested in just small skunk works,” he told the Ottawa Citizen. Interesting.

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3 Responses to “So What Next, Mr. Z.?”

  1. mnbv Says:

    “profitable growth” is the new business buzz word. Watch for it everywhere.

  2. Casual Observer Says:

    “profitable growth” is the new business buzz word. Watch for it everywhere.

    Uhh…its no buzzword..its mostly about sustainable growth as opposed to commodization which leads to margin pressures which lead to lack of profitability. Profitable comes from the root ‘profit’ which is a finance term.

    Mike Z has been very clear in saying that network consulting and operational services are where Nortel’s future lies. While the media has been focused on Nortel as a traditional telecommunications equipment vendor, I think this are will be deemphasized slowly since most network equipment will slowly be commoditized over time as cost per port continues to fall.

    As bandwidth continues to be used up, I suspect the internet will have more issues around deployment and operational issues which need to be solved for enterprises and carriers. There are a few emerging companies in this niche area (like OPNET Technologies) which I think traditional telecommunications vendors like Nortel would be wise to take a look at acquiring in order to more holisitically address problems with networks.

  3. guest Says:

    Isn’t “profitable growth” the essential goal for any publically traded company for the past 100 years?

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