Mark Evans

My Nortel Experiment

In late-December 2005, I decided to conduct an experiment by launching a blog called All Nortel, All the Time that just about Nortel Networks. Why? Well, I had one of those Wordpress.com “golden tickets’ that I wanted to use; there were no other blogs dedicated to Nortel (surprise surprise!), and I wanted to see how much traffic I could attract by writing a blog that wasn’t bolstered by my profile as a business reporter with the National Post.

Over the past 14 months, I’ve written 433 posts on Nortel and generated 282,000 pageviews, which works out to about 30 posts a month and 23,000 pageviews. Not terribly successful in terms of traffic but not bad given I’m writing about one company with a stock price that, until recently, has been nothing to write home about. In the past month, however, things are looking up. All Nortel, All the Time was picked up by Seeking Alpha, which focuses on investment opportunities, and traffic hit a record high today at 2,760 pageviews (it didn’t hurt that the CFO quit yesterday, and the company announced 2,900 jobs cuts today).

I’d like to think All Nortel, All the Time’s quasi-success has to do with being focused, enthusiastic and committed - and I would argue these are the elements if you are going to blog the right way; be it about technology, cooking, books or sports. Perhaps the most rewarding part is the traffic and comments I get from Nortel employees, and the fact that after all this time, I’m still the only Nortel blog in town (other than Nortel CTO John Roese). Make of that what you will!

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Nortel Sells UMTS Unit

Nortel has agreed to sell its UMTS unit to - surprise, surprise - Alcatel for $320-million. It was only a matter of time before Nortel sold the money-losing business, and Alcatel seemed to be the most logical buyer. While Nortel can certainly use the $320-million, it is below the expectations of analysts, who were looking for about $500-million. Nortel held a conference call today at 9 a.m. to provide an “update on advances to the execution of its business plan”. According to analysts, Nortel's UMTS access business was losing about $200-million a year on sales of $400-million to $500-million. No wonder Nortel wanted out so badly. With UMTS out of the way, Nortel CEO Mike Zafirovski can now focus on other parts of the business that don't meet his 20% market share benchmark. At the end of the day, Nortel will be a smaller player but, hopefully, profitable.
Update: For more views on Nortel, check out All Nortel, All the Time.

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Nortel: When a Profit is Not a Profit

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Show Me the Strategy

My column in today's National Post looks at Nortel's need to spill the beans on where it's headed strategically. CEO Mike Zafirovski has been working away for more than seven months on his corporate makeover, and now analysts and investors want in on his master plan. By the way, Nortel's annual meeting is today.
Update: Here's my story in Friday's National Post on the AGM. It includes some interesting details about some new stock options granted to Mike Z. at a lower strike plan than the ones he received last year when he was hired.

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Nortel Slashing 1,100 Jobs

Surprise, surprise (well, not really), Nortel is cutting 1,100 jobs and reviewing its pension plan. The jobs cuts will reduce annual operating expenses by $100-million in 2007 and $175-million in 2008. The company also unveiled changes to its pension plan from defined benefits to defined contributions contributions to  defined benefits, which will save Nortel about $100-million a year. And everyone wondered why Nortel CEO Mike Zafirovski is so bullish about the company's prospects.

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What Now, Mike Z.?: Part II

For another long drink about Nortel in the wake of the Siemens-Nokia joint venture, check out my story in today's National Post.

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Another Telecom Domino Drops: Nokia-Siemens Unite

If there wasn't enough consolidation pressure within the telecom equipment industry, a mega-deal between Nokia and Siemens will likely up the ante. In a deal that will create a $19.9-billion entity creatively called Nokia-Siemens Networks, Nokia will combine its network business unit with Siemens' carrier business. The new company, which comes in the wake of Alcatel's acquisition of Lucent, will have 60,000 employees but expects to shed 6,000 to 9,000 positions over the next four years.
  Perhaps one of the biggest questions now is what happens to Nortel, which had been rumoured to be exploring a deal with Siemens while there had also been active speculation about a deal (described by Scotia Capital Markets analyst Gus Papageorgiou as “Norkia”) with Nokia. Did Nortel CEO Mike Zafirovski get out-maneuvered or simply left sitting on the sidelines while two other players decided to dance? So what does Nortel do now? Maybe it goes after Siemens' enterprise business given Zafirovski is intent on Nortel playing in the market against rivals such as Cisco. Or perhaps Zafirovski will go after some kind of deal with Cisco or Juniper? Or does Nortel try to stay independent (if that's possible) until its makeover is done?
  As for why consolidation is happening, there are a few key factors: competition is brutal so profit margins have been savaged even as overall sales have rebounded. As a result, equipment makers have no choice but to slash costs. (Nokia and Siemens figure they will save $1.9-billion a year). Another factor is  competition from low-cost suppliers such as Huawei and ZTE that can aggressively bid for contracts. To make matters worse, you've got large customers such as SBC and AT&T getting together to shrink the number of equipment buyers.
Update: For other takes on the Nokia-Siemens deal, check out Mathew Ingram, Om Malik and IP Democracy.

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Kevin & Mark's Weekly Podcast

So, we're back with another podcast. This week, Kevin Restivo and I talk about:
- Nortel's first-quarter results - a quarter the company described as “tough and challenging”. For more Nortel news, check out All Nortel, All the Time.
- the launch of the Blackberry in Japan. Will it be Big in Japan (couldn't resist the opportunity to reminisce about the 80s) given the active use of wireless devices, application and content?
- Google's latest creation, Google Spreadsheets, which seems to have been quickly thrust out of the spotlight by Google Browser Sync, a very cool new Firefox extension.

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Why's Mike Z. So Bullish?

Nortel CEO Mike Zafirovski told analysts yesterday the company will post “some of the best results in Nortel's history” by 2008. So what does he see that investors don't given Nortel shares touched their lowest level yesterday since late-2002? How can he be so bullish at a time of fierce competition and lower margins within the telecom equipment market? Some of Mike Z.'s optimism about profits and operating margins may have to do with the dividends of fixing Nortel, which is undergoing a massive strategic, cultural and operational overhaul under his leadership. You get the impression the ex-Motorola COO believes there is a lot of low-hanging fruit to be picked before any of the really tough questions (such as whether to sell low-performing units or merge with Nokia or Siemens) have to be answered. For investors, do you buy into Mike Z.'s bullishness, and pick up a few Nortel shares or wait on the sidelines given the company's recent over-promise and under-deliver history?

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The Nortel Two-Step

Sometimes you wonder if Nortel can't win for trying. The company finally manages to convince itself its 2005 financial results are ready for public consumption (a positive development), then it goes and releases them late in the day on Friday after everyone's headed home for the weekend. (a negative development). From an optics perspective, it gives the impression that Nortel is trying to hide something because the only reason to issue a major press release late in the day on a Friday is if you want to avoid attention from investors and the media. Of course, Nortel will likely claim it received SEC clearance and/or that its paper work was completed Friday afternoon so it had no choice but to follow disclosure rules and release the financial results. Maybe this is true but this isn't the first time Nortel has utilized the Friday afternoon “trick” to release financial news. If Nortel - and CEO Mike Zafirovski - are at all interested in regaining the confidence of investors and analysts, they need to try to appear as if they are being as straightforward and transparent as possible. Issuing a press release to disclose financial results that should have come out a few months ago is not the way to do it.

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