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Mergers & acquisitions

Nortel Shuffles the Numbers

Nortel Networks Corp. (NYSE/Toronto: NT) has revised revenue figures for its enterprise business, in a puzzling move that raises questions about the company's plans for its enterprise gear (see Nortel Makes Revisions).

Nortel just started breaking out enterprise revenues in its 8-K form filed with the U.S. Securities and Exchange Commission (SEC) on October 22, 2002. That form lists revenues for the past year sorted into the following newly defined segments: wireless networks, enterprise networks, wireline networks, optical networks, and other.

Today's restatement subtly reallocates sales figures between enterprise and wireline networks. The end result is that enterprise seems to have a stronger track record of year-over-year growth, although sales have been down this year along with every other area of Nortel's business.

Nortel refuses to comment on the reasons for the revision. But it comes on the heels of a major push the company's made to stake its claim in the enterprise space, first by establishing a totally separate enterprise division, then raising the profile of its enterprise-oriented voice-over-IP products (see Nortel: It's Enterprise VOIP!).

The emphasis had at least one analyst buzzing about a possible sale of the enterprise division last month (see Plastina Out in Nortel Reshuffle). The requirement that separate accounting be implemented for the enterprise segment seems to bolster that notion. After all, why would Nortel be so intent on breaking out its enterprise numbers and getting them just right? Could a sale be in the works?



It might be fun to think so, but others aren't jumping to that conclusion. "It's not obvious that they're preparing for a sale from these numbers," says Steve Kamman of CIBC World Markets. He admits he's puzzled by it all, though: "The segmentation's changed a couple of times. You have to take each set of numbers on its own. We're not quite sure what to do with this."

Another source says it's a mundane problem with Nortel's bean counters. "This has happened before," writes one Canadian equity analyst who asked not to be named. "[An] internal accountant misunderstood where a particular product line fit in when restating old results."

— Mary Jander, Senior Editor, Light Reading
www.lightreading.com
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BobbyMax 12/4/2012 | 9:23:14 PM
re: Nortel Shuffles the Numbers It is good move on the part of Nortel so that different streams of revenues can be identified more closely.

Nortel has substantial products to serve the customers on a solid basis. Its quality of products unquestionably the best.
wayland_smithy 12/4/2012 | 9:23:13 PM
re: Nortel Shuffles the Numbers The phrase "rearranging the deckchairs on the Titanic" suddenly comes to mind ......
Reindeer 12/4/2012 | 9:23:09 PM
re: Nortel Shuffles the Numbers oh please. nortel starts to get their financial house in order and everyone freaks out. they have recognized the problems and are correcting them even though the decisions are hard. titanic? not.
dano4677 12/4/2012 | 9:23:08 PM
re: Nortel Shuffles the Numbers "Nortel has substantial products to serve the customers on a solid basis. Its quality of products unquestionably the best."

-this is hilarious...thanks for the laugh..you just made my morning..so how is that position at Nortel working out for you these days? "unquestionably the best" must refer to platforms other than the bps2k, pp8600/8100, and contivity in the enterprise space...i am struggling to think of what exactly that leaves behind...

Nortel has slipped into no-mans land when it comes to innovation and independence in the enterprise space. the cli on both the bps and the contivity ironically resembles that of it's strongest competitor in recent revs, customer service and web-based information/configuration document research/retrieval is horrific (on a good day), and new feature integration is always a day late and a dollar short.

nortel has never been interested in what the enterprise customer needs and/or wants and for this reason, it will always remain a sub-par, second/third choice vendor for enterprise L2/L3.

good thing they have those enterprise pbx/telephony sales to rely on...for now right?

cheers
Reindeer 12/4/2012 | 9:22:57 PM
re: Nortel Shuffles the Numbers "good thing they have those enterprise pbx/telephony sales to rely on...for now right?"

that is the whole point behind being a large diversified company such as nortel. they can feed off one business while others are restructuring. quite obvious I would think. the other smaller companies with the "gee whiz" technology may not survive this telecom winter anyway. the best technology does not win in teh end, it is the best business plan. period.
Metropolitian 12/4/2012 | 9:22:56 PM
re: Nortel Shuffles the Numbers Reindeer,

Unfortunately Nortel's lack of a good business plan has resulted in +60,000 people now being unemployed since Jan 2001.

If Nortel were properly managed, they could rely on the revenues of one strong division while the other divisions recover. But this is not the case as current layoffs, divestures of recent acquisitions and other last ditch short term measures have shown.

Cisco has endured the same economic hardship and has only layoff'ed minimal numbers of employees in comparison.

This current mess reminds me of the Paul Stern days magnified 10 times. At that time, Nortel was fortunate to have Jean Monty come along and clean up Stern's mess and set-up the stage for the successful Nortel of the late 1990's. It is a shame John Roth got drunk with power and Nortel's success and steer away from Jean Monty's vision and paved the road to Nortel's demise.
bitdropper 12/4/2012 | 9:22:55 PM
re: Nortel Shuffles the Numbers "The phrase "rearranging the deckchairs on the Titanic" suddenly comes to mind ......"

-------------------------------------------------

Funny post.

We used to refer to this at NT as: rotating a set of bald tires.
PacketGuy 12/4/2012 | 9:22:54 PM
re: Nortel Shuffles the Numbers Nortel's Enterprise busiess (essentially, Bay Networks) got crushed by cisco when they were two years late getting a 10/100 switch out the door - circa 1997. There are still have some big, loyal existing customers that buy to expand their networks, but as far as competing for new business with leading edge products, they are done.

Cisco wins the new business when a customer wants one-stop shopping. Foundry, Extreme, NetScreen, and others win if the customers want the best products available. Foundry does best in high-performance, high-bandwidth applications, and Extreme does well in low-cost closet connectivity.
optera 12/4/2012 | 9:22:31 PM
re: Nortel Shuffles the Numbers ..... may not survive this telecom winter anyway. the best technology does not win in teh end, it is the best business plan. period. ....



DO YOU REALLY MEAN TO SAY NORTEL HAD OR HAS A BUSINESS PLAN, GIVE ME A BREAK !
futureisbright 12/4/2012 | 9:22:26 PM
re: Nortel Shuffles the Numbers DO YOU REALLY MEAN TO SAY NORTEL HAD OR HAS A BUSINESS PLAN, GIVE ME A BREAK !

------
Nortel's enterrpise business plan, publicly announced is to be a clear number two, or second source to Cisco.

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