Archive for the ‘Wireless’ Category

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.

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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It’s a Lifestyle; Not Technology

February 12, 2007

At the upcoming 3GSM conference, Nortel promises to “challenge the industry to deliver the 4G “Lifestyle” by rolling out next-generation, high-speed wireless technologies that can deliver services such as video and high-definition TV broadcasting. When did 4G become a lifestyle? How come no one told me? If it means getting a fast, user-friendly Web access while on the road, I’m all for that. Nortel plans to walk the walk in addition to talking the talking about the 4G Lifestyle (4GL?) at 3GSM by demonstrating the wireless industry “first live end-to-end MIMO-powered WiMAX solution, using advanced innovative antenna technology to deliver high-bandwidth applications, such as real-time video, over personal mobile devices”.

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UBS Raises 2007 Estimates, Target Price

January 10, 2007

Citing Nortel’s prospects in the CDMA business this year, UBS Securities has raised its EPS and revenue targets to $12.12-billion and $0.66 respectively from $11.96-billion and $0.56. UBS also raised its stock target price to $26 from $23.50.
In 2008, UBS is looking for revenue and EPS targets to $12.4-billion and $1.50 compared with earlier estimates of $12.54-billion and $1.60 as it expects CDMA sales to decline by 6% to reflect the completion of Rev A rollouts (as opposed to earlier estimates of a 5% increase).
In terms of Nortel’s failure to be selected as one of Sprint’s three WiMax suppliers, UBS said this “is a disappointment given NT’s incumbency and focus to win the deal. We believe this loss may cause NT to reevaluate its overall wireless strategy and possibly deemphasize wireless longer term.”
On a positive note, UBS expects Nortel will focus on boosting its enterprise business in 2007 so it can become a “meaningful #2 to CSCO. We continue to believe NT would have to look at acquisitions to strengthen its enterprise portfolio, particularly in enterprise data”.
Update: TheStreet.com covered the news as well.

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So Why Did Sprint Overlook Nortel?

January 9, 2007

In the wake of Sprint selecting Nokia rather than Nortel as the third supplier for its $2.5-billion to $3-billion WiMax contract, it’s interesting read a research report issued last week by TD Securities analyst Chris Umiastowski (before Sprint officially unveiled Nokia as its choice). Umiastowski said Nokia’s selection would be a “disappointment” for Nortel because Nortel has been promoting WiMax as a strategic priority and enjoyed a long relationship with Sprint as one of the carrier’s key CDMA suppliers.
“We would argue there are few WiMax customers where Nortel would be better positioned than with Sprint,” Umiastowski said. “If Sprint were to select Nokia as an infrastructure supplier, it does not necessarily man that Nortel would not be sued. However, it would probably mean that any involvement by Nortel in the project would be a lot less relevant than it could be. In our view, it would be a huge disappointment for Nortel if they do not win at some part of Sprint’s WiMax build”.
Umiastowski suggests Nortel may have been left out of the mix because unlike Samsung, Motorola and Nokia, Nortel does not make mobile handsets. “We are starting to wonder if we could be seeing a shift in how WiMax infrastructure equipment is selected, where the vendor must also supply the carrier with WiMax handsets,” he said.
“If that were the case, it could pose a big challenge for the likes of Nortel and Alcatel-Lucent and could possibly relegate them to Tier 2 status suppliers”. (Editor’s note: Couldn’t Nortel and Alcatel-Lucent simply sub-contract the WiMax handsets as part of a contract proposal? Do they really have to make WiMax handsets?)

My Top Pick is….Nortel. Say What?

January 8, 2007

It’s not often you come across a fund manager who has Nortel has his/her top pick but Robert Callander, a portfolo manager with Caldwell Securities Ltd., appears to be the exception to the rule. Mr. Callander, who ranks Nortel as a “buy”, told the Globe & Mail he was encouraged by the company’s recent stock consolidation, which he sees as the final sign of a recovery. Callander’s also excited by Nortel’s cost-cutting program and the recent $2-billion contract with Verizon Wireless. “When you start to get wins with the biggest in the industry, other people stand up and take notice,” he said.

WiMax vs. DSL vs. Cable

January 4, 2007

There’s clearly a lot of interest in WiMax these days, particularly in the wake of Sprint’s multi-billion dollar investment to build a nation-wide network. Before anyone gets too carried away, Total Telecom offers up some insight into how WiMax is going to have a big challenge penetrating the high-speed business in developed markets, which are dominated by DSL (the carriers) and cable. It’s a good read, highlighted by its conclusion:

“All in all, achieving a viable business case will be immensely challenging for WiMAX operators in developed markets. Some may attempt to avoid head-to-head competition with DSL by focusing on short-term opportunities in rural areas, but their business plans must take account of potential future changes in the competitive landscape. In the majority of developed markets, it will only be a matter of time before DSL is available to the vast majority of households.”

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The Deal is Done!

January 2, 2007

Nortel has finally completed the sale of its UMTS business unit to Alcatel-Lucent (Isn’t it time for a new name yet?) for $320-million in cash – “less significant deductions and transaction related costs” (How much is “significant”?). Just out of curiosity, does AL simply wire the money into Nortel’s bank account, or does Patricia Russo write a check to Nortel CEO Mike Zafirovski, or does Brinks roll up to Nortel’s corporate HQ and drop off a few dozen bags of cash?

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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 Loses Out on Sprint’s WiMax Plans

December 29, 2006

According to the Wall St. Journal (hat tip to Seeking Alpha), Sprint has rounded out its WiMax suppliers by selecting Nokia ahead of Alcatel-Lucent and Nortel. Nokia will join Motorola and Samsung Electronics to supply technology for Sprint’s $3-billion WiMax network over the next two years. This can’t be good news for Nortel, which has pinned a lot of its future growth on WiMax. That said, Sprint is just a single contract so it’s not like Nortel’s WiMax dreams have evaporated (much like Nortel now appears to be back in BT’s good books after missing out on the 21CN contract). But it would have been a solid signal to the market if Sprint had tapped Nortel.

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Nortel Wins $2B Contract

December 19, 2006

Not sure quite to make of the news that Nortel has won a five-year, $2-billion contract to provide equipment and services to Verizon Wireless. From previous experiences dealing with Nortel and large contracts, I’m reluctant to trumpet the fact Nortel has won a $2-billion contract because who really knows if $2-billion of business will actually materialize over the next five years given technology changes, strategy changes and consumer behavior changes. Nevertheless, there has to be some good news from the fact Verizon will be using additional CDMA2000 radio base stations, switching, IP platforms, optical networking solutions and related equipment from Nortel.
“This contract confirms Nortel’s leadership in supplying innovative CDMA mobile broadband technologies and driving advanced communication services,” said Nortel’s Richard Lowe. “It’s our long term partners that know us best, so we’re particularly proud when an industry leader like Verizon Wireless asks us to be part of their team for another five years.” Of course, it’s fine to be the leader in CDMA other than the fact CDMA’s on the decline while GSM is on the rise but that’s another story for another day.
In mid-day trading, Nortel is up 58 cents to $24.33. A Reuter story on the deal can be found here.
More thoughts: I knew there was a reason this story sounded eerily familar. In January 2004, Nortel signed a five-year deal estimated to be worth $5-billion with Verizon Communications to migrate the carrier’s local and long-distance networks to Internet-based technology from older circuit-based systems. The agreement made Nortel the exclusive provider of Verizon’s local and long-distance class four and class five switches, and Voice-over-Internet Protocol and multi-media services equipment over the next 18 months. I’d be very surprised if Nortel will collect $5-billion from this agreement.

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Nortel’s New Niche: Hockey

December 12, 2006

If this whole Wi-Max strategy doesn’t work out, Nortel may have another wireless business poised to propel growth: hockey arenas. Nortel has signed a deal with Scotiabank place – the home of the Ottawa Senators – to provide a “state of the art” wireless network throughout the building. Earlier this year, Nortel signed a wireless deal with the Bell Centre where the Montreal Canadiens play. “Nortel is pleased to continue its long-standing partnership with the Ottawa Senators. In addition to rebuilding the Senators’ communications network, Nortel will build a customer visit centre in one of the Scotiabank Place suites,” said John Roese, Nortel’s chief technology officer. “We’ll be able to bring customers into the suite to watch some exciting hockey and, at the same time, see the latest technology in action.”

Nortel Wins Taiwanese WiMax Contract

December 8, 2006

As Nortel pursues a strategy to gain 20% of the emerging Wi-Max market, it has won a contract to provide equipment to Taiwan’s Chunghwa Telecom Co.’s WiMax network. Terms of the deal were not disclosed. Obviously, any contract win is a big deal but the question that analysts and investors need to ask is whether Nortel’s 20% goal is realistic given there are few markets now in which is has that much market share. Sure, Nortel is a strong wireless player but so are Ericsson, Alcatel/Lucent, Nokia, and Motorola so the competition for Wi-Max contracts is going to be fierce.

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Ericcson, Nortel Looking for Love in China

December 4, 2006

Shanghai Daily has a story about how Ericsson and Nortel are looking for big business the wireless markets in China and India, which are expected to generate contracts worth at least $26-billion as the two countries add about 12 million mobile customers a month. The focus on these contracts will no doubt be a major topic of conversation when more than 2,000 executives and government officials meet this week at the International Telecommunication Union’s Telecom World conference in Hong Kong. To put these markets in context, China added 5.9 million subscribers in October, while India attracted 6.6 million. And espite the strong growth in both countries, six out of 10 Chinese people don’t own a cell phone, while seven out of 10 have yet to sign up for a mobile phone in India.

Nortel-Alcatel Sign Definitive Agreement

December 4, 2006

In some more housingkeeping, Alcatel-Lucent has signed a definitive agreement to buy Nortel Networks Corp.’s UMTS radio access business for US$320 million. Alcatel-Lucent will acquire Nortel’s UMTS radio access technology and product portfolio, as well as customer contracts. About 1,700 people will join Alcatel-Lucent, including 1,100 R&D engineers based mainly in France, Canada and China.