Archive for the ‘R&D’ Category

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’s WiMax Dreams

January 1, 2007

By now, everyone knows Nortel is counting on WiMax as a key strategic pillar. For more check out an interview with Peter MacKinnon, general manager of Nortel’s WiMAX business unit and chairman of the LG-Nortel joint venture, who said his team lobbied to increase the WiMax-related R&D budget to $50-million a year from $25-million in 2006. It doesn’t seem like a lot of money but it’s not bad given Nortel CEO Mike Zafirovski has made it clear Nortel needs to reduce its total R&D budget.

Nortel Opens Turkish Centre

November 6, 2006

Last week, the international story was Nortel’s expanded R&D facilities in China; this week, it’s a new global operations centre of excellence in Turkey that will create 300 jobs. Nortel said the new facilities are part of its efforts to eliminate more than 100 global centers to create a smaller group of centres of excellence. In other words, the company wants to slash costs by making its operations more efficient, while tapping lower-cost talent in markets such as Turkey, China and Mexico. "Nortel is focused on providing the very highest levels of customer support whilst remaining cost competitive," said Joel Hackney, Nortel’s senior vice president, Global Operations and Quality. "Located in the heart of our EMEA region, the new Operations Center of Excellence in Turkey benefits from its proximity to major customers whilst drawing on a strong labor pool and improving our cost competitiveness."

Nortel Still Canada’s R&D King

October 18, 2006

Once again, Nortel topped Canada’s R&D spending list with $2.25-billion in 2005 even though this was a 12% drop from 2004, according to Research Infosource Inc. This placed it well ahead Bell Canada, which was second with $1.74-billion. Overall, the 100 biggest companies spent $12-billion, a 4.9% increase. “The R&D outlook is optimistic,” Ron Freeman, CEO with Research Infosource. “Spending has increased at over two-thirds of the top 100 companies, and in many instances, growth in R&D investments, exceeds revenue growth.”  Not that it’s relevant to Nortel or the telecom sector but Microsoft plans to spend $7.5-billion on R&D this year, $1.3-billion more than expectations.

Nortel Looks to Expand in India

September 11, 2006

As part of Nortel’s cost efficiency drive, it is looking to source more R&D from places such as China and India. Nortel is already using more than 1,000 employees of India’s Wipro, which recently celebrated its 15th anniversary working with Nortel on R&D. Wipro now provides Nortel with design, system integration, consulting, software release management and support for the company’s carrier and enterprise product lines. Source: Hindu Times.


Nortel Setting Up Shop in India

August 24, 2006

As Nortel drives to slash operating costs, it is creating a product design, development and testing centure in Bangalore, India that will employ 100 engineers by the end of the year. The team will work on Ethernet switching, security and VoIP. About 70 of these engineeers will come from Tasman Networks, which Nortel acquired for $99-million last year. Nortel already does some product development work in India through Infosys Technologies, Wipro and Tata Consultancy Services. Nortel also has a minority stake in Bangalore-based Sasken Communications, which provides software services to Nortel customers.

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Riddle of the Day: R&D

August 15, 2006

Just a thought but…how come Nortel is still spending close to $1.9-billion a year on R&D when it’s apparently looking to focus on businesses with at least 20% market share. You would think that R&D would be among the areas where CEO Mike Zafirovski’s cost-cutting program would have tackled already.

Nortel Looking to Unload R&D Lab

August 14, 2006

Another day, another cost-cutting exercise at Nortel. This time, it wants to lease one of its research labs in Ottawa. Apparently, there has been some interest in the 180,000 sq. foot facility. According to the Ottawa Citizen, Nortel originally planned to sell or lease three of its labs at its Ottawa campus under a “real-estate consolidation program” announced last year but the company put that plan on hold, and is now looking only at leasing the one lab.

Nortel’s $1.9B R&D Plans

February 26, 2006

There seems to be some confusion about CEO Mike Zafirovski’s promise to reveal Nortel’s $1.9-billion R&D plans this week. The $1.9-billion figure is what Nortel spent in 2004 so he seems to be implying Nortel will maintain R&D spending at the same level, even though the company has talked about having a more effficient structure by operating fewer facilities and being more focused. In any event, what Mike Z. has done is set high expectations among analysts on what he’s going to disclose this week. Given the way his comments came across during a presentation last week at the RBC conference in Whistler, analysts are probably looking for something dramatic from a strategic, operational and/or structural perspective. For more on Nortel’s future, BusinessWeek has a story in the most recent issue.