Plastina Out in Nortel Reshuffle

Nortel Networks Corp. (NYSE/Toronto: NT) has regrouped its divisions in an effort to be "focused more directly around its customers" (see Nortel Reorganizes).

The company is eliminating its Metro and Enterprise Networks division and moving the products that were contained there into separate Wireline Networks and Enterprise Networks businesses. Frank Plastina, former president of the dissolved division, is leaving the company after 15 years.

At least one analyst thinks the sorting could mean Nortel's prepping to sell its enterprise business. "The important thing is the accounting," says Frank Dzubeck, president of Communications Network Architects. If the company regroups its financials along the new segmentation, it's possible the company could be thinking of selling one of them. In Dzubeck's view, the likeliest sale would be enterprise gear.

Nortel's new Wireline Networks division will be headed by Sue Spradley, who's been in charge of Nortel's voice-over-IP product line. The division will include all "voice, data, and multimedia service offerings, as well as... circuit technology solutions," according to Nortel's public statement. Up to now, the circuit-switched products were part of Metro and Enterprise, Nortel says.

The new Enterprise Networks business will be led by Oscar Rodriguez, who's been in charge of the company's Intelligent Internet products, which included a potpourri of hardware and software, including the enterprise BayStack switches and security offerings.

The company's Wireless and Optical Networks divisions remain unchanged, headed, respectively, by Pascal Debon and Brian McFadden.

Nortel's Metro and Enterprise Networks division has been its largest revenue segment, representing nearly 44 percent, or $1.2 billion of the company's $2.7 billion in revenues for the second quarter, ended June 30, 2002 (see Nortel Reports Q2 Numbers).

But it's also been the company's second-biggest loss leader, next to Optical Networks. Last quarter, the division revenues were down 38.7 percent year over year, compared with 46.4 percent for Optical.

Apparently, some investors think the new grouping shows promise: At press time, Nortel shares showed some upward movement from their position in the sub-dollar range. Shares were trading at $0.51, up $0.02 (4.08%).

Nortel hadn't confirmed at press time whether it would change its accounting to reflect the new divisions, although it's reported by segment up to now. "You can expect that it will evolve," writes spokesman David Chamberlin in an email. He says more details will come when the company reports earnings October 17.

Analyst Timothy Bechter of Legg Mason Inc., isn't reading that much into Nortel's latest move. "Nortel's trying to get closer to the customer, trying to get its sales force directed at where the business is. They've done this a few times in the past. But this seems sort of superficial... I'm not sure how useful it will be this time. It didn't make much difference before."

Neither Dzubeck nor Bechter sees much significance in the departure of Frank Plastina, who once was spoken of as a possible successor to ex-CEO John Roth (see Nortel's Empty Room at the Top). In times as tough as these, analysts seem inured to changes that might once have raised eyebrows.

Today's reorg is the latest attempt by Nortel to stanch its fiscal bleeding. Despite some minor good news (see Nortel: No Mercy ), the company has recently warned that revenues could sink another 15 percent when it reports third-quarter earnings. And most observers are predicting many more layoffs and cutbacks.

To top off its woes, Nortel's being sued for about $14 million by erstwhile customer Genuity Inc. (Nasdaq: GENU), which claims the company breached contract terms with the beleaguered carrier. Nortel says it hasn't yet been served with the suit, but, Chamberlin says, "We believe the suit is without merit and will defend ourselves vigorously."

— Mary Jander, Senior Editor, Light Reading
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whyiswhy 12/4/2012 | 9:38:23 PM
re: Plastina Out in Nortel Reshuffle Enterprise unit to Cisco, the rest to Siemens...
toyopta 12/4/2012 | 9:38:22 PM
re: Plastina Out in Nortel Reshuffle Who is Sue?
Nuetrino 12/4/2012 | 9:38:19 PM
re: Plastina Out in Nortel Reshuffle Old school DMS person given the reins of a C2P produts and did not accomplish much. Someone is looking out for her.

Dunn is a cancer at Nortel - he always has been. In the eyes of customers he is irrelevent, and now he has cast Nortel in his own irrelevent image...

Here's what I think Nortel should do: Sell or Shut down the optical compontents business, then,
sell Long Haul - better yet, shut it down!Next, protect the DMS and Meridian 1 insalled base and grow it with IP enablement,retrofits and new apps.

Roth starved enterprise for 3 years (which would of buffered the current trough, simply being in Enterprise hyper diversifys your revenue streams). Get some cash infused into the enterprise to create products that are going to place QoS and access speed demands on the Service Providers, and then watch the carriers scramble to buy upgrades and network gear.... pretty simple formula.

DarkWriting 12/4/2012 | 9:38:18 PM
re: Plastina Out in Nortel Reshuffle Well, I guess I've seen this mistake enough times on these boards to determine that its needs attention....

It's "should have" or "would have" or "should've" or "would've", NOT "should of" or "would of"!!!!
Belzebutt 12/4/2012 | 9:38:09 PM
re: Plastina Out in Nortel Reshuffle Enterprise unit to Cisco

And Cisco would want it because... ?
tink 12/4/2012 | 9:38:07 PM
re: Plastina Out in Nortel Reshuffle As long as we're at it, would everyone please note: you are contracts to "you're" while "your" is a possessive pronoun.

Oh, hell, it's a waste of our breath, DW.
MrLight 12/4/2012 | 9:38:04 PM
re: Plastina Out in Nortel Reshuffle Nuetrino's statement " protect the DMS and Meridian 1 insalled base and grow it with IP enablement,retrofits and new apps." in his post is right on the mark. Hopefully that is what Nortel is planning to do.

Nortel better get moving since the Cisco IP phones are getting reasonable traction in the market.

Another thing Nortel should do is address the expanding market for "IP private Line", meaning the movement of private lines from DSO based to Ethernet/TCP/IP transport based.

There is a lot more Nortel can do, but it is up to the leadership team at Nortel to figure it out.

Part of that process is of course talking to their customers and suppliers to see how they view Nortel's business. You know , along the lines of that FedEx commercial with the people in the boardroom taken aback by the courier knowing more about their business than they do. Well guess what; that is usually the case when you sub-contract and/or externalize your operations, as most major companies have to do to stay competitive.

CanMan 12/4/2012 | 9:38:01 PM
re: Plastina Out in Nortel Reshuffle There is no way Cisco would buy Nortel or even some of the business. It totally flies in the face of Ciscos acquisition strategy. They tend to buy small companies, preferably valley based that they can integrate into their company easily. Chambers hates complicated aqcuisitions and just wouldn't put Cisco in that situation.
The culture clash between Nortel and Cisco would be incredible.

Aslo, let's be real, Nortel isn't going anywhere. Just like the US wouldn't let Chrysler go under and bailed them out, Canada will bail out Nortel if they need to. They are the crown jewel of Canada and Canada needs them. They may continue to suffer for a while but when all is said and done, they will be OK (although it looks bleak now)
2bits 12/4/2012 | 9:37:55 PM
re: Plastina Out in Nortel Reshuffle I wouldn't be so sure that a Chrysler-style bailout is in the works for Nortel from the Canadian government. The government has had no trouble standing by while Nortel let go of 60,000 employees during the past 2 years (half of them Canadian).
This week's Canadian speech from the throne (ie setting government tone for next 1-3 years) was a throwback to the sixties, with focus on new social programs, national park creation, healthcare, etc. No talk of saving fallen corporate stars or providing bailouts to former high-fliers.

When Chrysler was saved, it meant saving lots of US jobs, whereas a bailout of Nortel would mean saving equal numbers of American and Canadian jobs ... just doesn't have the same ring to it and it won't fly with the Canadian taxpayer.

hitekeng 12/4/2012 | 9:37:54 PM
re: Plastina Out in Nortel Reshuffle CanMan wrote "There is no way Cisco would buy Nortel or even some of the business..."
I would not bet my paycheck on that!!! Alcatel almost acquired Lucent a while back and those were the French that most americans keep reminding the world they saved them in world war II. So if such a merger was pondered, then the premise of Cisco acquiring Nortel would look more plausible from that perspective. Also, Nortel has much less overlaps with Cisco (with such being largely in Enerprise) than ALA would have had with LU (optical, voice, PBX,...). Moreover and with Nortel coming under Cisco's wing, there will less qualms about "buying American" in the North American market....
So I am not saying it will happen but "never say never.." as James Bond (the 007 that is and not the LR poster) once said....
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