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Former Nortel Execs Want to Buy Nortel

A news item by the Canadian Broadcasting Company (CBC) reported that a group of former Nortel executives said they want to buy Nortel and keep it a Canadian company. The three members of the group are ex-Nortel President Bob Ferchat; David Patterson, a former Nortel director; and David Mann, a former Nortel vice president. Although the group has private capital, it wants the Canadian government to provide a $1 billion float loat to see their plan through, according to the CBC. Patterson wants the company to remain Canada's top spender on research and development. Mann said that the new company would be focused on building an ultra high-speed broadband network across Canada.Under the group's plan, Nortel would be headquartered in Ottawa and include about two-thirds of the company's existing business, with the remainder cut or sold to another buyer. Based on this statement, and implied priority on network services, it is highly likely that the Enterprise Solutions (ES) unit would be part of the sell-off. The ES business could conceivably fetch between $500 million to $1 billion and help pay off the government loan. As reported, Siemens Enterprise Communications, through its former CEO James O'Neill, expressed strong interest in ES. Avaya, another rumored buyer, has remained quiet on the issue, but there are indications they may no longer be interested in the acquisition.

Right now the fate of ES is unknown. Attendance at the current International Nortel Network Users Association (INNUA) conference is down 40% from last year. Nortel's state of bankruptcy was cited by Victor Bohnert, INNUA executive director, in a Network World article as the second most important reason for the decline (behind the economy, the leading reason). Many INNUA customer attendees are optimistic about ES, but they have an incentive to appear so if they have major financial and personnel investments in their Nortel solutions. Nortel CEO Mike Zafirovski and Joel Hackney, President, ES, both offer words of encouragement to their customers that Nortel remains a viable entity and will be so in the future, but market share and shipment estimates indicate that Nortel is sliding down a slippery slope from which it may never rise. ES voice revenues are down sharply and non-Nortel customers are staying away in droves. No consultant I have spoken with recently supported recommending a Nortel solution to their client if they were not an existing Nortel shop, despite acceptable product performance capabilities; the risk factor is too great when there are many other supplier solutions to choose from.