Nortel's Router Strategy
According to Infonetics Research, the router and switch market climbed 28% in the third quarter to US$1.6 billion, including 11% sequential growth in core and edge routers. While Juniper and Cisco continue to dominate the market, Avici Systems saw its market share tumble to 0.3% from 1.3%. This market share evaporation begs the question about Nortel's router strategy given its partnership with Avici, which includes a small equity stake. Does Nortel need to make a strategic acquisition to get a better/bigger market foothold? Buying Juniper is totally out of the question given Nortel's management and financial troubles but a small strategic acquisition(s) makes a lot of sense. Nortel would do well to follow the Cisco modus operandi when it comes to deal-making. Of course, Nortel tried to make strategic deals in the late-1990s but blew its brains out with a series of multi-billion dollar disasters. Interestingly enough, the guy who headed up that program - Bill Kerr - is now Nortel's CFO. Go figure!
