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Nortel Unifies Optical

Nortel Networks Corp. (NYSE/Toronto: NT) has moved its metro and long-haul optical products under one Optical Networks division headed by Brian McFadden, who formerly headed the company's optical long-haul division.

"It made sense operationally. And Brian has a lot of metro experience," says a company spokesperson. Nortel's also intent on integrating its optical technologies in future metro and long-haul offerings. So moving it under one roof seemed the best way to proceed.

When reports of the division change hit the Canadian papers this morning, it was unclear whether by taking over metro optical as well as long haul, McFadden wouldn't be displacing colleague Frank Plastina, who heads up Metropolitan and Enterprise Networks. That's absolutely not the case, Nortel says. Plastina will continue to be in charge of Nortel's intelligent Internet, VOIP, enterprise, and optical Ethernet product lines.

Nortel continues to have three divisions: Wireless, headed by Pascal Debon, as before; the new Optical Networks, headed by McFadden; and Metropolitan and Enterprise Networks, headed as before by Plastina (who was once, back in the Roth era, widely considered a CEO-designate).

Debon, McFadden, and Plastina continue to report to CEO Frank Dunn.

"There's been no management change," says Greg Mumford, CTO of Nortel. "All we've done is add a bit to Brian's responsibilities."

An internal memo from Dunn, apparently issued to employees last week, outlines McFadden's new responsibilities: "Brian will have P&L responsibility for the combined Metro Optical and Long Haul business. His accountabilities include investment decisions, priorities and product marketing for non-Optical Ethernet applications, as well as R&D deliverables for all optical products, including optical product requirements for Optical Ethernet solutions."

In an interesting twist, McFadden is taking on all of Nortel's DWDM and next-gen Sonet products, including the OPTera Metro 5200 and 3500 series, spokespeople say. But several so-called optical Ethernet products, including the OPTera Metro 1000 series and the Passport 8600, are staying with Plastina's division. To make matters hairier, Plastina will continue to focus on optical sales to enterprise customers.

The split's a confusing one, especially since Nortel acknowledges that the OPTera Metro 5200 and 3500 series can be used in optical Ethernet applications. Indeed, it raises questions about how permanent this latest deck shuffling will be.

"It wouldn't surprise me from a reporting basis if Nortel was to reduce its structure to only two divisions -- wireless and wireline," says a Canadian financial manager, who asked not to be named. It would be easy to just give Plastina a separate title, he says, if McFadden were eventually put in charge of all optical products. After all, the position of COO hasn't been filled since Clarence Chandran left last year (see Nortel's Empty Room at the Top).

Meanwhile, though, Nortel seems intent on its present strategy. Marco Pagani, who was head of the Metro Optical business under Plastina's direction, will stay in the Metro/Enterprise division, but will be in charge of a new Optical Ethernet business.

Analysts seem unfazed by the news. "Long-haul optics isn't expected to recover until late 2003 at the earliest, so I view it positively that [Nortel is] getting each division in a position to be profitable," says the Canadian analyst.

In other news, Nortel's managed to exceed expectations in the sale of its equity and common share offering made late last week. The overallotment, or greenshoe offering, has been taken up and oversubscribed, Nortel says, bringing in about US$1.475 billion instead of the originally anticipated $1.3 billion (see Nortel to Raise $1.3B and Nortel Increases Offering Estimate).

— Mary Jander, Senior Editor, Light Reading
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dljvjbsl 12/4/2012 | 10:15:43 PM
re: Nortel Unifies Optical
" If that consolidation does not happen soon then the whole industry may crash."

As opposed to the good times we're enjoying now, I suppose.

My supposition is that the entire industry is facing the prospect of bankruptcy. The whole industry could just run out of money and be unable to proceed. This industry has to be sized to the very reduced market or it is not viable. At least that is my opinion.

My other opinion is that Nortel is not going to be one of the survivors if there are any.
dodo 12/4/2012 | 10:15:42 PM
re: Nortel Unifies Optical Hitekeng

Those "well connected" are seeking refuge under Wireless.

Oh yes, some VPs have already jumped ship since last march because they knew the lay offs would be announced for Q'2. One even had the gall to draw up a list of who should be axed in June while she managed to find a safe place in Wireless. This is a person who does not know how to define a network element.

We just have to wait and see
dljvjbsl 12/4/2012 | 10:15:41 PM
re: Nortel Unifies Optical This is probably an unhelpful post but ther is one Nortel employee who is absolutely contributing nothing to the company. He recently received a major pay increase. His position could be elimiated without causing any disruption to the company. I wonde if Nortel could lay off John Roth and use his salary to fund a team of 8 to 10 people.
sigint 12/4/2012 | 10:15:37 PM
re: Nortel Unifies Optical zipple:
Why did you choose Alcatel as the survivor? (Cisco seems obvious to me, but Alcatel less so.)

Thinking about it - bulk of Cisco's revenue is from the enterprise market. The mantra of that market to reduce equipment to commodities. Cisco may ultimately become the victim of that commodification.

If the PC market is an indication, bulk of the stuff sold would be assembled from boards and parts picked from the flea market. Code could be downloaded from the Vendors of components.

Cisco would continue to be a leading supplier, but would they continue to dominate the market the way they do now ?

ALA has probably a wider geographical spread of market as compared to NT or LU. Their presence in Asia is impressive, as it their ability to cultivate politicians that matter in protected markets. Don't forget, today they are the largest telecom company on the planet.
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