Nortel Buzzboard

I’m still working through all the media coverage from today’s Nortel news. I’ll be spending most of tomorrow focusing on going through the news, and highlighting the more interesting coverage.

Until then, I thought one of today’s articles was of particular interest. This article in Telephony talks about Nortel’s move to focus it’s future R&D resources on 4G LTE, and how the new relationship with Alvarion will help Nortel still play in the WiMAX market.

New GM of WiMAX solutions Scott Wickware is interviewed, and suggests that the Alvarion relationship began through a little matchmaking from one of Nortel’s customers:

“One notable customer suggested we get together with Alvarion,” Wickware said. “They felt …

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Pavi Binning, Nortel’s CFO, was next up on the agenda. Here are some notes from his presentation:

Pavi said that Nortel’s goal was to reduce IT costs by 10% in 2008 and finance costs by 25% in 2008
He also showed the below chart, which provided a view of how Nortel’s revenues will evolve from today to 2011, and the CARGs for each business unit needed to achieve those goals.

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Here are a couple of notes from Lauren Flaherty’s speech. Lauren is our chief marketing officer.

One item that Lauren talked about was the changing tone of Nortel’s media coverage over the last few years. Nortel’s history of accounting and other problems have been increasingly NOT part of media coverage, as the first slide below shows.
Lauren also showed a chart that gave a preview of some enhancements coming late this year to nortel.com. The second pic below is a mock-up of the new site.
Lauren also talked about the increasing number of customers that are willing to “go public” as Nortel customers through case studies, advertising, etc. She highlighted 200 new public case studies, video testimonials, …

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After lunch Dennis Carey and Joe Flanagan did a tag-team presentation that focused on various Nortel Operations topics. Dennis Carey is Nortel’s Executive VP of Corporate Operations, while Joe Flanagan is Nortel’s senior VP of Global Operations.

Here are my notes from their session:

Dennis Carey started things off. He provided an update and view on Nortel’s efforts to cut $1.5 billion in costs over three years. See that slide below which breaks these efforts down across various areas of the business
Another item he talked about a lot was Lean Six Sigma. He put up the following chart that is new to me, and really details the results of how Nortel’s Six Sigma program is working …

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Dietmar Wendt just finished his presentation at IR day a few minutes ago. Dietmar heads up Nortel’s Global Services business. Here are some notes I took from his preso.

Dietmar highlighted that Nortel’s Global Services business had $2.1billion in 2007 revenue with an 18% operating margin, with a predicted CAGR of 6% through 2011 and relatively flat operating margin % (17-20%).
Wendt: “Don’t ignore Polycom and Tandberg” as critical Nortel partners.
In 2006, only 11% of services revenues were “services led” revenues — versus “product attached” where services was an add-on. In 2008 that is 15% services led, with a goal to get to 25% by 2011. See the below slide for a view of Nortel’s current competitive …

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Joel Hackney, Nortel’s president of Enterprise Solutions, just finished his presentation at IR day a bit ago. Again, you can watch this all live here, and also get the slides on the same page.

Joel talked about the progress in enterprise - here are some notes I took on some of the more interesting points:

Joel said there has been a 4X improvement in Nortel’s enterprise product POR (plan of record) predictability, with a 70% improvement in on-time POR delivery. Basically this means we are much better at delivering on-time the products and features that we’ve promised.
Joel says Nortel’s enterprise group is on track for profitability in 2H08.
Joel talked a little about the hot topic of energy efficiency, …

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Things that stood out for me in Philippe Morin’s presentation on our Metro Ethernet Business:

3G and 4G is driving 25-40% a year growth in mobile backhaul traffic. Pretty impressive when you think that, really, 3G traffic is only now becoming mainstream in North America. The graph below shows some of our projections.
The Carrier Ethernet market is expected to grow 76% by 2011. As Philippe said in his preso, “If you’re going to bet on a technology, bet on Ethernet.” Kind of like what Verizon did this morning.
We’re expecting the market for 40G/100G to grow from $0.3B in 2008 to $2B in 2011. And we want to have a 30% share of that 2011 market.

…

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Some interesting tidbits from Richard Lowe’s presentation on our Carrier business:

Carrier staples, the CDMA and GSM markets, are expected to shrink in the next three years by 14% and 25% respectively.
Nortel’s key growth investments will be in 4G wireless technologies such as WiMAX and LTE. No surprise there, particularly since we announced next steps in this strategy this morning: a strategic agreement with Alvarion to bring a WiMAX solution to market faster and at a lower cost. And an announcement that we plan to focus our main R&D resources on 4G LTE.
The VoIP and applications market is expected to grow by 28% in 2011. Nortel is currently #1 in global VoIP and we plan on maintaining that …

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A couple of quick notes from George Riedel’s speech that ended just a bit ago. Riedel is of course Nortel’s Chief Strategy Officer.

Riedel focused a lot on the evolving portfolio focus from mature products to growth. He had a really interesting slide (below) that expands a bit on the first slide that I posted previously from Mike Z’s preso.
Interesting note: Nortel already has 14 wins in 40 Gig — the solution just went GA in May.
Interesting note 2: Nortel has doubled the size of our healthcare business in the last year.

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Mike Z opened up the day’s agenda with some of this thoughts on Nortel’s direction. I’m multitasking a bit with all the other news that has come out this morning, but there were a few items that I thought were really interesting from Mike’s presentation:

Mike mentioned today’s 4G news, specifically the new relationship with Alvarion. He said that the work with Alvarion will “allow us to leverage our R&D investments better.” This has been a topic in the past around Nortel’s investments in both WiMAX and LTE. Today’s news really seems to focus Nortel’s main investments on LTE for faster delivery in an accelerating market, while at the same time partnering Nortel with a company …

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