RESEARCH TRIANGLE PARK, N.C. – Is there a merger in Nortel’s future?
That’s the scuttlebutt since last week’s announcement that Siemens Communications Group and Nokia were merging business units to form a joint venture. An earlier deal between Lucent and Alcatel had already raised questions about whether Nortel might have to seek partners as telecom gear makers consolidate.
Light Reading, one of the best websites devoted to coverage of the communications and networking industry, reported on Friday that Siemens, Avaya and Nortel “are in talks about a potential three-way enterprise communications equipment joint venture”.
Citing several industry sources, Ray Le Maistre wrote for the website that Siemens has acknowledged it wants to find a “new home” for its enterprise unit.
“Since then, Avaya and Nortel have both been suggested as potential acquirers. But according to a European telecom industry executive, Siemens has not only held talks with those companies separately, but has also discussed a three-way joint venture that would create the world’s largest PBX player,” Le Maistre said.
“All three companies said they couldn’t comment, though the Siemens spokesman added: ‘There are a lot of things going on, but until something is fixed, it’s all speculation.’”
The Toronto Star offers a different possibility.
“A three-way combo of Nortel, Motorola and Huawei now seems most likely, resulting in a firm with about 19 per cent of global market share in telcom equipment — equal to the smallest of the new Big Three,” The Star said on Monday.
“Ego counts, of course, and Nortel CEO Mike Zafirovski left Motorola after being passed over for the top job. But a deal could be done if Zafirovski and the turnaround CEO who got his Motorola job, Ed Zander, could work out a not-unusual co-CEO arrangement. And the Chinese, eager to tap Nortel’s wireless technology, are equally sanguine about upheaval in the developing countries where they seek oil and the Toronto suburb where financial restatements are a quarterly occurrence.”
The speculation about possible mergers and consolidation within the industry means more pressure for Mike Zafirovski, Nortel’s new chief executive officer. He not only has had to straighten out Nortel’s well-documented financial mess but also put a new management team in place and refocus the company’s business efforts.
As The Global and Mail in Toronto put it aptly in a recent profile: ‘Mr. Fix-It’ takes on his biggest challenge’
Zafirovski, or Mike Z as he’s called at Nortel, has a history of turn-around efforts.
“He’s a great guy to be in a foxhole with,” Boeing Co. chairman and CEO Jim McNerney told Catherine McLean of The Globe and Mail. McNerney worked with Zafirovski at GE Capital and GE Lighting and is a fellow Boeing board member.
“He’s one of those guys who is pretty fearless,” McNerney said. “People look at these big challenges and see the glass is half-empty. He’s one of these people who sees the glass half-full and is stimulated by it.”
But McLean noted that Mr. Z. can’t ignore the industry shake-up taking place.
“The latest issue facing the company is the rapid consolidation in the industry, which may force Mr. Zafirovski to speed up his corporate makeover,” she wrote. “After this week’s merger between Nokia Corp. and Siemens AG’s telecom gear businesses, the industry’s former top dog must now make some tricky choices about how it plans to compete against these new industry giants.”
At least Mr. Z has his management team in place. The hiring of former Broadcom executive John Roese as chief technical officer last week completed the reshuffle.
“We are going to wake up the industry to the good things that are happening at Nortel,” Roese told The Ottawa Citizen.