Nortel Preaches Hyperconnectivity

Nortel Networks Ltd. promised a new era of relevance and integrity yesterday during its annual shareholder meeting.

During Nortel's annual shareholder meeting, Chairman Harry J. Pearce and CEO Mike Zafirovski touted a "new Nortel" focused on financial transparency and the aggressive pursuit of new technology.

"Nortel is on offense again for the first time in years," Zafirovski said.

The meeting served primarily as an update on progress made towards the company's "Business Transformation Plan," which CEO Zafirovski announced in early 2006. (See Nortel Targets Higher Margins and Nortel CEO Maps Out His Vision.) Since then, Zafirovski has brought in a largely new management team, repositioned the company's technology efforts, aggressively trimmed operating costs, and announced a series of customer wins.

While noting that Nortel's transformation plan was expected to take three to five years, Zafirovski highlighted several significant steps taken to improve the way the company operated.

The CEO boasted about the management team Nortel had assembled during the previous year, a team he said is "made up of new talent and existing leaders with proven track records."

"In fact," Zafirovski said, "over 50 percent of the top 250 leaders of your company are either new to Nortel, or new to their jobs."

That management shakeup came as Zafirovski poached execs from his former employer, General Electric Co. (NYSE: GE), as well as Nortel competitors such as Avaya Inc. , IBM Corp. (NYSE: IBM), and Juniper Networks Inc. (NYSE: JNPR).

(See Nortel Names CPO, Nortel CFO Leaves (Again), Nortel CEO Serious About Services, Nortel Names China Prez, Nortel Appoints EMEA Prez, Nortel Names CTO , Nortel Shuffles APAC Execs, Nortel Names CMO, Nortel Names Services Prez, Headcount: Plentiful & Hard to Get, Zafirovski Adds Another GE Exec to Nortel, Nortel Appoints New Exec, Nortel Poaches Juniper Strategist, Nortel Appoints CPO, 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.)

Underlining the company's new strategic direction, the CEO discussed what he believes is a new era in telecommunications unfolding based on "the demand for multiple connections, anywhere, anytime, and from any device," calling this phenomenon "hyperconnectivity."

"Hyperconnectivity means developing new ways of creating networks, with simpler designs and lower underlying costs," he said, noting that "Nortel is uniquely positioned in this area."

Over the past year, Nortel has shifted its technology focus, selling off its UMTS access business and making an aggressive push into next-generation Carrier Ethernet and Provider Backbone Transport (PBT) equipment. Without a clear 3G wireless roadmap, the company is also betting big on 4G WiMax technology. (See Nortel Puts UMTS On a Limb, Alcatel to Buy Nortel's UMTS, Alcatel Snags Nortel 3G Unit, Analysts: Alcatel Got a Bargain, Nortel Launches PBT, PBT Gathers Support, and Zafirovski: We'll Get 4G Right.)

Nortel's PBT backing helped win contracts with BT Group plc (NYSE: BT; London: BTA) for its all-IP 21st Century Network (21CN) initiative and Shanghai Telecom, a China Telecom Corp. Ltd. (NYSE: CHA) subsidiary. (See Nortel Wins BT Deal, Nortel, Siemens Win PBT Deals at BT, Nortel on PBT: Today BT, Tomorrow the World!, Nortel Wins Shanghai Telecom, and Nortel's PBT Debuts in China.)

Talking about his interactions with customers, Zafirovski noted a "shift in narrative" from the beginning of 2006 to the end of the year, which he said "signaled that we were fully back in the game."

"Last year, I made more than 150 trips to visit hundreds of our customers around the globe, and I witnessed a real change in the way customers were viewing Nortel," Zafirovski said. "They are embracing new technology, a new vision for the future, a new way of doing things."

Perhaps most importantly, Zafirovski and Pearce underlined a commitment to what Pearce called "consistent and reliable financial information."

"We are deeply committed to implementing effective financial reporting and internal control," Pearce said. "There is nothing more important to the future success of NT than a culture of integrity in all that we do."

Over the past several years, Nortel has been plagued by financial missteps that have led to a series of earnings restatements and consistent turnover at the CFO position. In addition to replacing the CFO, the company hired new auditors last year. (See Nortel Restates the Restated, Nortel to Restate More, Nortel Clarifies Restatement Review, Nortel Delays, Restates, Nortel's Retro Quarters , and Nortel Selects KPMG.)

Prior to its annual meeting, Nortel announced preliminary financial results for the first quarter of 2007 that were largely ahead of analyst expectations. (See Nortel Prelims Surprise the Street.)

Investors have met the company's preliminary results and shareholder meeting with enthusiasm. Nortel shares were up $0.11 (0.44%) to $25.23 in late afternoon trading on Thursday.

— Ryan Lawler, Reporter, Light Reading

KelleyMcGowan 12/5/2012 | 3:09:13 PM
re: Nortel Preaches Hyperconnectivity Hyperconnectivity is not the only area in which Nortel is leading the pack. Nortel is now one of a few vendors that have passed IPv6 Ready Phase 2 for both the Core Protocols and IPsec. Nortel was the first vendor in the industry to be granted the IPv6 Ready Phase 2 Logo with the Ethernet Routing Switch 8600 (based on Nortel's Infinity IPv6 protocol stack).
These new certifications were both achieved with Infinity on CDN's platform independent Picasso software base. Picasso (Platform Independent Control, Application, and Services Software) is an integrated set of best in class software components that will be used across CDN's portfolio.
This combined with the ICA Alliance with Microsoft really demonstrates Nortel to stay on top.
-0 12/5/2012 | 3:09:09 PM
re: Nortel Preaches Hyperconnectivity I still half cry half laugh when I remember that Bay implemented MOSPF before NAT (that is multicast OSPF and network address translation). They were loosing (to Cisco) tons of money on simple things like CLI and NAT and were touting projects like I-PNNI.
So, where do you think all those product marketing people gone after Nortel acquired Bay?

(OK, OK, I do recognize that while approach did not change it might be yielding Nortel more fruits than it did to Bay).
jasanz 12/5/2012 | 3:09:09 PM
re: Nortel Preaches Hyperconnectivity Excuse my ignorance.... What is the benefit of having passed IPv6 Ready Phase 2 for both the Core Protocols and IPsec?

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