Comments on: The Fall of Nortel – How It Affects Their Customers http://teledynamic.com/blog/the-fall-of-nortel-how-it-affects-their-customers/ Just another WordPress weblog Thu, 23 Jul 2009 19:36:55 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: William Huggy http://teledynamic.com/blog/the-fall-of-nortel-how-it-affects-their-customers/comment-page-1/#comment-16 William Huggy Thu, 23 Jul 2009 19:36:55 +0000 http://www.teledynamic.com/blog/?p=33#comment-16 I would say Roth had a good vision to prepare the company for the next wave of opportunities as a result of voice and IP convergence; poor execution was the reason for Nortel's downfall: - Lack of Board and Exec management oversight to ensure best decisions are made re the buying spree of various companies (there was one exec, who shall remain nameless, that just had too much power!). Yes while Bay was the largest, there were many others that Nortel significantly overpaid for based on valuation on futures. - The failure by management to recognize that the dot.com hype could fall flat, leaving the company with significantly devalued assets and huge debt (I believe total spend buying companies were $25B+). - Fairlure to properly assess the readiness of the products of the companies they bought....so they ended up with a lot of paperware and IP that were not going to generate revenue for sometime....lousy ROI! - They had too many companies to integrate at one time, again could not realize the solution value of all the pieces. All of the above and short-term greed, caused the company to go off the rails! The most sad part, recovery was possible but the Board continued to show their ineptness by not hiring the best subsequent CEO's to get the job done! I would say Roth had a good vision to prepare the company for the next wave of opportunities as a result of voice and IP convergence; poor execution was the reason for Nortel’s downfall:
- Lack of Board and Exec management oversight to ensure best decisions are made re the buying spree of various companies (there was one exec, who shall remain nameless, that just had too much power!). Yes while Bay was the largest, there were many others that Nortel significantly overpaid for based on valuation on futures.
- The failure by management to recognize that the dot.com hype could fall flat, leaving the company with significantly devalued assets and huge debt (I believe total spend buying companies were $25B+).
- Fairlure to properly assess the readiness of the products of the companies they bought….so they ended up with a lot of paperware and IP that were not going to generate revenue for sometime….lousy ROI!
- They had too many companies to integrate at one time, again could not realize the solution value of all the pieces.

All of the above and short-term greed, caused the company to go off the rails! The most sad part, recovery was possible but the Board continued to show their ineptness by not hiring the best subsequent CEO’s to get the job done!

]]> By: Roy Clason http://teledynamic.com/blog/the-fall-of-nortel-how-it-affects-their-customers/comment-page-1/#comment-19 Roy Clason Fri, 24 Apr 2009 19:51:42 +0000 http://www.teledynamic.com/blog/?p=33#comment-19 While the purchase of Bay was not doubt a very costly mistake, the main reasion Nortel fell from grace was the mis management of their corporate manufacturing policies. The man left in charge while Roth departed was ill equipped to deal with an exploding "demand" for OC-192 Optical devices and totally ignored those closest to the customers regarding real market demand and network deployments. Many of the major accounts vice presidents were unable to convince senior management that the growth cure was really artificial. While the purchase of Bay was not doubt a very costly mistake, the main reasion Nortel fell from grace was the mis management of their corporate manufacturing policies. The man left in charge while Roth departed was ill equipped to deal with an exploding “demand” for OC-192 Optical devices and totally ignored those closest to the customers regarding real market demand and network deployments. Many of the major accounts vice presidents were unable to convince senior management that the growth cure was really artificial.

]]> By: zz http://teledynamic.com/blog/the-fall-of-nortel-how-it-affects-their-customers/comment-page-1/#comment-17 zz Fri, 24 Apr 2009 16:40:36 +0000 http://www.teledynamic.com/blog/?p=33#comment-17 The acquisition of Bay Networks itself was not a poor decision for Northern Telecom. It was clear at the time that Voice would be converged onto data networks. After Cisco, Bay Networks was the next largest vendor in Enterprise data networking space and was looking to expand into the ISP market. Nortel failed due to poor decisions by upper management that didnt truly understand the business and didnt nurture and focus on the appropriate product lines. The bureaucracy and product silos within Nortel led to low quality products that were not able to grow market share. The acquisition of Bay Networks itself was not a poor decision for Northern Telecom. It was clear at the time that Voice would be converged onto data networks. After Cisco, Bay Networks was the next largest vendor in Enterprise data networking space and was looking to expand into the ISP market.

Nortel failed due to poor decisions by upper management that didnt truly understand the business and didnt nurture and focus on the appropriate product lines. The bureaucracy and product silos within Nortel led to low quality products that were not able to grow market share.

]]> By: Fabrice http://teledynamic.com/blog/the-fall-of-nortel-how-it-affects-their-customers/comment-page-1/#comment-18 Fabrice Fri, 24 Apr 2009 14:22:48 +0000 http://www.teledynamic.com/blog/?p=33#comment-18 Don't confuse timing with cause and effect. The "dotcom" implosion didn't so much affect Nortel as the optical telecom implosion that was also occurring; related but independent to a large degree. The effect on optical telecom was the more severe; networking faired reasonably well, witness Cisco. Nortel's view that it could do many things was largely fed by its success - and leadership - in optical telecom. In that era I worked for a supplier of leading-edge optics to the industry, including Nortel, and it was widely acknowledged that Nortel was cleaning its competitors' clocks. Nor were inflated purchase prices exclusive to Nortel. The aforementioned company I worked for purchased a competitor with a 50 sq. meter manufacturing plant and about 50 employees for $2.2B. The company's stock then ratio'd as badly as Nortel's. At $9.8B, Bay seems a comparitive bargain. All those in telecom have been brought down since those heady days - and the preceeding nine decades as regulated monopolies - but Nortel never recognized it no longer ruled the world. Don’t confuse timing with cause and effect.

The “dotcom” implosion didn’t so much affect Nortel as the optical telecom implosion that was also occurring; related but independent to a large degree. The effect on optical telecom was the more severe; networking faired reasonably well, witness Cisco.

Nortel’s view that it could do many things was largely fed by its success – and leadership – in optical telecom. In that era I worked for a supplier of leading-edge optics to the industry, including Nortel, and it was widely acknowledged that Nortel was cleaning its competitors’ clocks.

Nor were inflated purchase prices exclusive to Nortel. The aforementioned company I worked for purchased a competitor with a 50 sq. meter manufacturing plant and about 50 employees for $2.2B. The company’s stock then ratio’d as badly as Nortel’s. At $9.8B, Bay seems a comparitive bargain.

All those in telecom have been brought down since those heady days – and the preceeding nine decades as regulated monopolies – but Nortel never recognized it no longer ruled the world.

]]> By: Was Bay the Beginning of the End? | All About Nortel http://teledynamic.com/blog/the-fall-of-nortel-how-it-affects-their-customers/comment-page-1/#comment-15 Was Bay the Beginning of the End? | All About Nortel Fri, 24 Apr 2009 10:51:24 +0000 http://www.teledynamic.com/blog/?p=33#comment-15 [...] a blog post, Teledynamic Communications president Randy Kremlacek contends the Bay deal was beginning of the [...] [...] a blog post, Teledynamic Communications president Randy Kremlacek contends the Bay deal was beginning of the [...]

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