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Nortel Poaches Juniper Strategist

Nortel Networks Ltd. announced another addition to its new-look management team this morning with the appointment of George Riedel as Chief Strategy Officer. (See Nortel Names Strategy Chief).

Riedel, who "will be responsible for leading the Company's corporate strategy including business development and mergers and acquisitions," according to Nortel, joins from Juniper Networks Inc. (NYSE: JNPR), where he was vice president, strategy and corporate development. Previously, he was with McKinsey & Co.

Riedel's role at Juniper has been taken by Spencer Greene, who has been at the company for six years. (See Juniper Names New Execs.)

Nortel's Chief Strategy Officer (CSO) position has been vacant since the previous CSO, Dion Joannou, was appointed as president, North America, in a management reshuffle last September. (See Nortel Reorganizes Again .)

Nortel declined to comment on whether identifying potential acquisition targets will be top of Riedel's "Things To Do First" list.

Riedel is the latest in a series of high-ranking appointments made by Nortel CEO Mike Zafirovski since he took the helm last November. (See Nortel Appoints New CEO , Nortel Appoints CPO, Nortel Appoints EVP, Nortel's New Faces Face Tough Task, Nortel's Clent Came & Went, Nortel Hires Legal Eagle, Nortel Hires Quality SVP, and McFadden, Spradley out at Nortel.)

A couple of Zafirovski's new hires have been from one of his former employers, General Electric Co. (NYSE: GE), but under the conditions of his own appointment the new CEO can't poach any of his former Motorola Inc. (NYSE: MOT) colleagues. (See Nortel, Moto Settle on Zafirovski .)

It hasn't just been Nortel's appointments that have captured attention since Zafirovski took over. During the past three months the company has made an acquisition, forged a major broadband alliance, and announced a monster payout to settle outstanding lawsuits. (See Nortel Takes $2.5B Hit, Nortel & Huawei: Broadband Buddies, and Nortel Takes Tasman for $100M.)

The vendor has also been subjected to public criticism by some of its vendor partners. (See ECI: Nortel Didn't Deliver and Avici Downsizes to Survive.)

— Ray Le Maistre, International News Editor, Light Reading

No-tell 12/5/2012 | 4:05:22 AM
re: Nortel Poaches Juniper Strategist Nortel has to do more house cleaning and business selling before they can do many acquisitions.

They can't really buy other companies with NT stock because, since the stock is valued so lowly, they would have to give up a rather large percentage of the company to the stockholders of the acquired company. And their stock isn't terribly attractive because there are still plenty of concerns about the viability of the company--remember, they've only announced a settlement of shareholder suits, they haven't actually reached a settlement. And they can't afford to spend a lot of cash because (a) they aren't generating any cash and (b) they have to save a lot of cash for the big shareholder settlement they announced.

So they have to have more cash to buy companies. They can do so by streamlining or by selling businesses. But I know from experience that selling parts of Nortel isn't easy: the company isn't set up as a bunch of autonomous, easily divided businesses--everything is intertwined, from finance systems, IT, outsourcing contracts, supply chain, you name it. Plus, if Nortel as a whole isn't very valuable, then little pieces of it certainly aren't very valuable and therefore will not be able to provide lots of cash.

Expect only small deals from Nortel for some time because they can't afford anything else.
futureisbright 12/5/2012 | 4:05:31 AM
re: Nortel Poaches Juniper Strategist "Nortel declined to comment on whether identifying potential acquisition targets will be top of Riedel's "Things To Do First" list."

But of course. That's part and parcel of the GE Model: 1) identify and keep those businesses that are number one or two in their segments, or have the portential to get there; 2) get rid of the others; 3)reinforce the formers with strategic acquisitions.

One of the key characteristics of the network equipment biz is that you need a whole bunch of gizmos to make solutions.

So, from a GE portfolio model standpoint, do you want to be number one or two in a gizmo segment, or in a solution segment?

Cheers
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