News Analysis   More News Analysis

Is Ericsson the Hope for Nortel's MEN?

As Nortel Networks Ltd. reported a second-quarter loss of $274 million (and another big loss) today, it's worth noting that the yearly drop-off in revenues for its Metro Ethernet Networks (MEN) unit was steep, but still in line with the company's revenues overall, which fell 25 percent from the year-ago quarter. (See Nortel Reports Q2.)

That could be a glimmer of good news for the MEN group. And at least one analyst feels Ericsson AB (Nasdaq: ERIC) should step up as the big suitor in the bid to secure Nortel's optical transport market share. More on that in a bit.

First, have a look at how the MEN group isn't so far out of line with what we now call Nortel:

Table 1: Nortel Revenues (by Segment)
2Q08 2Q09
Carrier Networks ($B) 1.14 0.92 -20%
Enterprise Solutions ($B) 0.65 0.47 -28%
Metro Ethernet Networks ($B) 0.46 0.33 -27%
LG-Nortel ($B) 0.32 0.20 -37%
Other segments ($B) 0.06 0.06 -8%
Source: Nortel Networks

Table 2: Metro Ethernet Networks Revenues (by Category)
2Q08 2Q09
Optical Networking ($M) 292.00 211.00 -28%
Data Networking and Security ($M) 62.00 35.00 -44%
Services ($M) 101.00 87.00 -14%
Source: Nortel Networks

Nortel noted that some of its big customers last year didn't spend as much this time around, saying, in a statement, that "revenues from certain customers in the second quarter of 2008 that did not repeat to the same extent in the second quarter of 2009..."

While Nortel's MEN group is no worse off than the rest of the company, it does stand out because the bidding war for its assets appears nonexistent. Sources say Nortel still can't seem to find a suitor willing to shell out what it thinks (but hasn’t said) its optical transport group is really worth. (See Who's Waving Their Wad at Nortel’s MEN?, Selling Nortel's MEN, and NSN May Buy Other Nortel Assets.)

As hinted earlier, one analyst thinks Nortel's MEN group still has value, and he singles out Ericsson as the most logical suitor.

"At some price, MEN has to be valuable to someone, but it’s certainly a far cry from the prices Nortel was originally seeking," says Heavy Reading analyst Sterling Perrin.

"Ericsson still seems to be the best fit for MEN, based on Nortel’s North American presence in optical and Ericsson’s lack of optical networking market share. Most other potential suitors have a fair amount of overlap and so would really only buy or need bits and pieces of MEN," he says.

Also, it's a scenario that fits Ericsson's behavior, since the company is already in the process of using Nortel assets to strengthen its hand in North America. (See Ericsson Delivers Knockout Blow to NSN.)

Something should happen soon, though, because Nortel's MEN is losing its luster, even in the more cutting-edge technologies like 100-Gbit/s optical transport, Perrin notes. "I am seeing a lot of companies developing this technology internally now, so I’m not sure that Nortel’s 100G is as valuable as it was to suitors even 12 months ago."

— Phil Harvey, Editor-in-Chief, Light Reading

Newest Comments First       Display in Chronological Order
Page 1 of 2 Next >
inauniversefarfaraway
User Ranking
Friday August 14, 2009 10:12:00 AM
no ratings

Abashford,

You were dissappointed the bad guys weren't winning?

Also try the humble pie and save some room for seconds.

You'll have to pay for the privelege of specifics. That is to say, go to bankruptcy court, get them to approve gnat swatting on the internet, that'll get a chuckle. Put it up on YouTube, worth a laugh. So your veiled libel threats are empty. You are full of chuckles.

Hardly a cop out: folks like you then go crying like babies to the administrative staff of this board to get people kicked off. So nice try buddy.

Good luck with your continued failure.

Are you a dissapointment in real life too?

abashford
User Ranking
Friday August 14, 2009 9:23:40 AM
no ratings

Never got past episode I of the new Star Wars series, it sucked.

"If you see the Nortel model as being destroyed by external factors... not to mention a few hecklers, you are truly lost."

Not sure why you continue to feel the need to put words in my mouth, perhaps you don't want to argue with the ones I am actually saying, or is it some Jedi mind trick? "These aren't the droids you're looking for."

If you are so sure we are evil, name some names, cite some actions, I am really trying to understand where your delusion is rooted.  You continue to allude and allude, but never anything concrete.  How was GM's demise due to complacency (which I agree -GASP- is as accurate as one word can be) and NT's due to 'evil'?

"Nortel failed it's employees at every turn and continues to do so."  You see Nortel and its employees as different??  A corporation and its culture is just the sum of its employees, board & shareholders, there isn't some 'force' that exists separately. Who is evil, the board? CEO?  CxOs?  Who?  

Every time I get into this discussion about the 'evil corporation', people can't point at anyone they know personally... just the abstract.  Thats a cop out.  Thats the unwillingness to understand and learn from the past.

If the answer to corporate problems is just "do no evil", I guess we should all go work for Google.

inauniversefarfaraway
User Ranking
Thursday August 13, 2009 5:29:49 PM
no ratings

Dear Abashford,

Thank you for your considered reply. As delightful as Austin Powers may be, a more relevant epic may be found in the Star Wars series, particularly the Revenge of the Sith where Annakin turns to the dark side. This is you, my friend, lost in an evil empire and outwardly committed to destroying your fellow man for a mere illusion and unable to distinguish right from wrong. Do you also watch this movie thinking that the Jedi are evil? This would be a clue.

Nortel -was- an institution. Your commitment to "attack" detractors for the sake of a thing as ephemeral as an institution such as this shows some very strange priorities. How far are you willing to go for your illusions? If we were face to face, what would you do? Personally, my sense is that you lack the courage to do something tangible, that you might prefer the hypocritical and insinuative destruction. This is the hallmark and legacy of Nortel. Another thing, you need to let go, the beast is gone baby.

Libel is something that Nortel and people such as you appear to know very well. Be advised that there is only grief for you and Nortel on this tortuous road. Your beloved institution is a victim of itself in this arena and should be taken as a cautionary tale. Also be advised that I take all comers as you are sure to fail since truth is very much on my side. There another more powerful clue in the facts, Nortel is gone, if you can't figure out this means they were doing something fundamentally wrong, consider yourself happy to be earning as much as you are because you clearly are not making the grade. Besides, Nortel is de-clawed and toothless now, who are you going to call? There must be a lot of legal firms wanting your business paid up front and in cash... "Fear, hate, the ways of the dark side..."

It was in the vicinity of the year 2000 that I voiced the opinion that Nortel only had a few years ahead of itself. Friends and family expressed skepticism at this opinion, knowing the long history behind the company and the widely held belief that Nortel would go on no matter the circumstances, sort of like government. My estimate of four years was only a bit short and undoubtedly lengthened by the vast capital available during the bubble. Yet the fact that Nortel treated its employees present and former savagely and exhibited a bizarre tendency to "attack" it's detractors by way of career destruction was the fatal flaw in this institution. It was often done under the guile of getting rid of bad apples, or ensuring the right thing was done or seeing no evil... This was something it would not escape it turns out. That culture of hate was well disguised and viewed internally under the best of intentions thanks no doubt to people like you who see only good in vast wrongs. Did you know that the road to hell is paved in good intentions? This old adage may concern you in ways you can't even fathom.

So go ahead, my dear friend, show me more vindication in your fruitless and sterile attempts at quieting the truth of the sad Nortel, the greatest failure witnessed so far. Enron was a failure of greed, for example, GM complacency... For Nortel however, the failure was that of culture, they never saw evil in their bad deeds. Attacking detractors as you aptly put it, is a service to all those hard working and ethical people and is so flawed. Cast the first stone buddy, for surely you are (self) righteous. Nortel failed it's employees at every turn and continues to do so. Publicly lauding them, but privately savaging them. If you see the Nortel model as being destroyed by external factors and a few bad decisions, not to mention a few hecklers, you are truly lost.

A last bit of information in closing here, do be careful of your apprentices as they may jettison you into your own reactor core.

It is too bad people disconnected with reality can't seem to bridge these paradigms between their imagined good intentions and the evil they perpetuate. Who are you going to attack next Mr. Libel to save your lost god Nortel?

Thank you also for pointing out the bitter taste of crow as you ingest those famous last words: "Nortel will survive!" Do you also remember "I believe in Nortel?"

The value is more than you appreciate. Ethics and morals are the base upon which everything else is built. Without them, you wind up like Nortel broken and bankrupt. Rarely is the deriliction embodied by the values expressed by you and executed by Nortel given due concern. There is much to learn from this failure. You would rather move on to your next victims unquestioned and unscathed, whether it be investors, employees, taxpayers...

It is a good thing that these words find purchase in your mind.

abashford
User Ranking
Thursday August 13, 2009 9:22:52 AM
no ratings

'ina'

Why do I take exception to your rants:

1) The lack of added value to the discussion.

2) Your assertion that the people of Nortel are 'evil'.

Who is 'evil', where do you draw the line?  Is it the CEO?  The upper management?  Is the rank and file 'evil' for doing an 'evil' person's bidding? The people I work with on a day to day basis certainly are not, and those extend from the very bottom to very close to the top.  These people are some of the most capable and moral people I have ever come across, and it sickens me people like you feel some need to pile on and use words like 'evil'.  There are a bunch of other words you could have used and I would have just said 'well, he is entitled to his opinion', but 'evil' is out of line.

*Evil or 'morally reprehensible' indicates that a person's actions are intentionally to the detriment of others.  With the exception of one long-departed CEO to whom I have no personal visibility, I see nobody that even comes close to this behaviour.  Am I frustrated with some decisions that were made?  Yes, but I am not privy to all the variables that were at play in these decisions, and you certainly are not.  Inevitably when I dig, there are 'good' reasons behind every 'bad' decision.

Finally you state "You are also likely to be one of these people who belived that "Nortel would survive!""... You -of all people- are not a person that I would allow to put words in my mouth.  I certainly couldn't handle the sour taste.  I have not, and will not share my opinions on this topic.  I will however, attack you at every opportunity if you continue to apply your libelous paint brush to many people I respect and admire.  

It is YOUR behaviour that I see as evil*. 

inauniversefarfaraway
User Ranking
Wednesday August 12, 2009 5:28:43 PM

Abashford,

You are also likely to be one of these people who belived that "Nortel would survive!"

What happens when we fail to heed the lessons of history?

It is puzzling that there is no "real" reason for the Nortel failure, evil is a good reason. These people were bad and they failed. Is that a shock?

abashford
User Ranking
Wednesday August 12, 2009 9:35:43 AM
no ratings

Feel better now 'inauniverse'?  Come on... let it out... its good for you.

Now if you'll excuse me, I have to go eat some babies.  "Baby-back-baby-back-baby-back-ribs..."

http://www.youtube.com/watch?v=6trDIm1n8C4

inauniversefarfaraway
User Ranking
Tuesday August 11, 2009 6:25:10 PM

Even in bankruptcy, Nortel succeeds in hobbling itself and potential suitors... Peotry in motion. Nice to observe such consistency.

As previously stated, it will be a bright and sunny future with Nortel erased from the face of the earth. Whatever nucleus of evil inside this thing, let us hope it fades into oblivion.

Many romantics out there refuse to believe Nortel may be evil, but it is. Whatever good is in there has been losing the battle for a long time. How could a culture of innovation be so helplessly lost to the idiots, the maniplators, the no-good?

The consolation is that destroyers are eventually destroyed themselves.

Is there hope to buy the rotating icon of evil, the chrome plated "O"? Probably have to agree to not buy from EBay for a year...

skyote
User Ranking
Tuesday August 11, 2009 5:22:00 PM
no ratings

I don't believe Ericsson is eligible to purchase Nortel MEN after bidding on the CDMA/LTE assets.  In order to be a "qualified bidder", said bidders had to agree to not submit bids for any other Nortel assets for a period of 1 year.  In fact, this is why RIM was not accepted as a qualified bidder for the CDMA/LTE assets...they were interested in other Nortel assets, and are challenging the "qualified bidder" terms.

Phil Harvey
User Ranking
Tuesday August 11, 2009 11:00:22 AM
no ratings

Now that Nero's publicist has weighed in, I think we can put the matter to rest.

Also, I happen to agree: Mike Z. didn't cause the mess at Nortel, but the sr. staff he brought in didn't help much in the way of clearing a path for him.

James_B_Crawshaw
User Ranking
Tuesday August 11, 2009 4:49:47 AM
no ratings
I believe Nero was the subject of a smear campaign. Some sources indicate he was away from Rome at the time of the fire and on hearing of it returned to help put it out. This much we know: there were no fiddles in 1st century Rome. How history will remember (if at all) the Nortel debacle remains to be seen. However, I hardly think Zavirofski can be blamed for starting the fire. He was just unable to put it out.
Page 1 of 2 Next >
LIGHT READING MARKET PLACE
Polycom Sweepstakes
Win Two High Res Video Conferencing Systems. $8,000 Value. Enter Now to Win!
The Time is Now for FCoE
Join Cisco and its partners for a live informative webcast on 12/10/09
Free Cell Phones
Get a New Cell Phone or Upgrade for Free. Smart Phones, Blackberries and more.
Free e-Signature Site
Try it Now - It Only Takes Seconds! Used by Fortune 500 and Worldwide. Send & Sign Documents Online.
TruePulse Buys&Sell Central Office Equip
Nortel, Cisco, Alcatel, Lucent, Tellabs, Calix, Occam & Anda: GigE, DWDM, SONET
The blogs and comments are the opinions only of the writers and do not reflect the views of Light Reading. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
White Papers SPONSORED CONTENT
Featured
Podcasts SPONSORED CONTENT
Services Transformation - by Alcatel-Lucent Communications service providers want to be able to bring new services to...
Rural Ops Bridge the Digital Divide - by Tellabs Tellabs helps IOCs build triple play networks
Driving Network Transformation - by Alcatel-Lucent In order to deal with competitive pressures, the change in service models...
Back(haul) to the Future - by Tellabs Tellabs works with Vodafone to meet growing mobile broadband demands.
MRS Logistica - by Tellabs Tellabs helps MRS Logistica transform its existing, largely outdated TDM networks to IP.
Carrier Ethernet Offers an Enterprising Solution - by Tellabs What is VPLS and how does it work? Tellabs takes a closer look.
Swisscom’s Network Makeover - by Tellabs Fresh off the launch of 7.2 Mbps HSDPA, Swisscom sees 3G as an opportunity to launch a unifying ...
Telecom in Namibia - by Tellabs Tellabs helps Telecom Namibia with next-gen challenges
Companies
Alcatel-Lucent (5872), AT&T (1948), BellSouth (848), BT (1287), Cablevision (615), Cisco (5297), Comcast (1910), Cox Communications (858), Deutsche Telekom (807), eBay (Skype) (345), Ericsson (1617), France Telecom (964), Google (489), Huawei (1045), Intel (1127), Juniper (2022), Microsoft (1115), Motorola (1486), Nokia Siemens Networks (2645), Nortel (3956), NTT (173), Siemens (1359), Sprint (1059), Telefonica (439), Time Warner Cable (969), Verizon (2587), Vodafone (510), Yahoo (339)

Broadband
Access equipment (2169), Access technologies (2378), Broadband loop carriers / multiservice access nodes (388), Cable modem termination systems (CMTSs) (1104), Cable TV chips (286), DSL (2425), DSL chips (227), DSLAMs (703), Free-space optics (35), FTTx (3265), Gaming consoles (58), Gaming servers (22), Media adapters (23), Municipal networks (106), PON (1364), PON chips (217), Satellite (497), WiMax (880), Wireless LAN (354)

Cable Digital
Cable Modems (681), Cable/MSO equipment (2802), CableLabs (470), Compression (MPEG-2 and MPEG-4) (279), Docsis (1046), Embedded multimedia terminal adapters (E-MTAs) (213), Head-ends (233), PacketCable (129), QAM (307)

Chips, Components & Subsystems
ASICs & FPGAs (101), ATCA (480), ATM chips (13), Comm chips (2360), Dispersion compensators (149), Lasers (920), Modulators (163), Mux/demuxes (299), Network processors (933), Optical amplifiers (349), Optical channel monitors (92), Optical components (2824), Speciality fiber (94), Switches & OADMs (397), Transceivers (1247), Transmission fiber (419), Variable optical attenuators (139)

Ethernet
10-Gbit/s Ethernet switches (1454), Access devices (272), ATM switches (333), Circuit emulation (16), Converged access (103), Ethernet chips (573), Ethernet equipment (2212), Ethernet over copper (231), Ethernet PONs (160), Ethernet services (1909), Ethernet technologies (568), Multipoint (131), Multiservice edge equipment (143), Multiservice provisioning platforms (622), Multiservice switches (389), PBT (Provider Backbone Transport) (256), Point-to-point (139), Pseudowire (Layer 2 tunnels) (132)

IP & Convergence
B-RASs (229), Cell/WLAN (77), Compression equipment (13), Core routers (1294), DNS (56), Edge routers (1686), ENUM (53), Fixed/Mobile Convergence (485), GMPLS (76), IMS (1088), IMS Control Layer (27), IMS Service Layer (27), IP equipment (1224), IP software (381), IP technologies (1482), IPv6 (99), Layer 3 VPNs (194), MPLS (1774), MPLS (687), Multicast (36), P2P (258), Pseudowire (Layer 2 tunnels) (132), QOS (350), SIP (396), Traffic managers (808), Wireline/Wireless (59)

Mobile/Wireless
3G Evolution (175), Broadcast (Mobile TV, etc.) (189), Carrier WiFi (226), CDMA (3G) (367), Core Network (173), EV-DO (126), Femtocells (30), Fixed Wireless (Microwave, etc.) (71), Fourth Generation (4G) Wireless (70), GSM/EDGE (430), HSDPA/HSUPA (321), IMS Core (47), Long-Term Evolution (LTE) (188), Mobile Advertising (24), Mobile Music (31), Mobile TV (130), Mobile Video (65), Mobile WiMax/WiBro (92), Mobile/Wireless (5877), Packet Core (61), Radio Access Network (236), TD-SCDMA (Chinese 3G) (67), Transmission (38), Ultra-Mobile Broadband (UMB) (8), UMTS(3G) (340), Voice Core (21), WiMax (880), Wireless Backhaul (272), Wireless Chips (191), Wireless LAN (354)

Optical Networking
40-Gbit/s transmission (452), Core optical switches (760), CWDM (289), DWDM (1842), Long-haul WDM equipment (654), Metro optical switches, ROADMs (1173), Metro WDM equipment (773), Multiservice provisioning platforms & add/drop muxes (375), Optical equipment (2191), Optical switches & crossconnects (398), Optical technologies (417), Sonet/SDH (1036), Sonet/SDH chips (351), Wavelength services (305)

Security
Anti-virus (29), Denial-of-service attacks (44), Encryption (97), Endpoint security (22), Firewalls (61), Intrusion detection & prevention (45), IPSec VPN (801), Security (1835), SSL VPN (862), URL filtering (12), User authentication (24)

Services Software
Activation (415), Billing systems (761), Content/software downloads (231), Customer relationship management (231), Data Integrity (61), Element management systems (36), Fault management (69), Inventory management (153), Mediation systems (204), Messaging (231), Middleware (72), Mobile location (41), OSS (2584), Performance monitoring (335), Policy control (269), Provisioning (553), Revenue assurance & fraud management (334), Service delivery platforms (SDPs) (328), Service management (220), Service-oriented architectures (310), Services (2480), Web gateways (56), Web services (124), XML (51)

Test & Measurement (Sponsored by Etaliq Inc)
Access equipment Access test & measurement equipment (126), Comm chips Comm chips test & measurement equipment (29), Ethernet equipment Ethernet test & measurement equipment (170), IP equipment IP test & measurement equipment (122), MPLS MPLS test & measurement equipment (14), Optical components Optical components test & measurement equipment (113), Optical equipment Optical test & measurement equipment (886), OSS OSS test & measurement (1059), Sonet/SDH Sonet/SDH test & measurement equipment (1599), Test & measurement (1755), VOIP equipment VOIP test & measurement equipment (145)

Video (Sponsored by Ericsson Televisionary)
Broadcast (Mobile TV, etc.) (189), Broadcast video equipment (including encoding) (730), Content delivery network (CDN) (394), Content protection (270), DVRs (665), Internet Video (840), IPTV (3461), Middleware & business support systems (845), Set-top boxes (1624), Stored video servers (379), TV (3581), Video equipment (2448), Video services (4130), Video software (1349), Videophone (185), VOD (2635)

VOIP
Application servers (186), Centrex (198), Conferencing (78), Contact centers (38), Enhanced voice (34), Enterprise (637), Media gateways (357), Messaging (73), Presence management (43), Residential (835), Session border controllers (398), Signaling gateways (104), Softswitches (1090), VOIP chips (167), VOIP equipment (3423), VOIP services (3768), VOIP software (620), VOIP VPNs (28), Wholesale (220)