Nortel

Which VoIP companies are up for sale now? Which aren't?

Doug Mohney — Mon, 17 Nov 2008 09:42:35 -0500

VoIP companies that (likely) aren't for sale

You can never say never, but anyone who has managed to take down another round of venture capital money since September is unlikely to take a quick buyout offer. Their backers are happy with the existing business model and have enough faith in both the potential upside and current management to wait out the storm for the next couple of years.

So you can put Intelepeer and iSkoot on the "unlikely" list for the next 12 months. But never say never.

VoIP companies likely for sale

Conversely, anyone who "Never says never" too loudly is worth looking at again. Plunging stock prices, antsy investors (both public and private), and an atmosphere of fear will provide the catalyst for a number of deals - good and bad - in 2009.

(Pieces of) Alcatel-Lucent

With a new leadership team and new organization coming in place on Jan. 1, 2009, Alca-Lu may want to shed and/or spin-out one or more divisions and/or product lines. We're sure Dialogic and GENBAND are looking over what might be applicable and available.

AudioCodes

Publicly-traded AudioCodes could prove to be an attractive buy for any number of hardware companies, due to its core technology, professed love for HD and abundance of fun partnerships. At a market cap of $78 million at the close of business on November 14, the price might be right, followed by some divesture/spin-down of existing assets.

(Pieces of) Nortel

Nortel might need more cash faster, because we don't think the $1 billion asking price for the Metro Ethernet division is going to happen anytime soon. Given they let go of a lot of people in the executive suite earlier this month, existing shareholders are going to press for more rapid and drastic changes to go with the planned job cuts.

New executives might be tempted to chainsaw the company down - especially if there is a new CEO in the first quarter of '09.

SimpleSignal

It's a hosting/SaaS play, it has a lot of good technology and the company continues to generate a steady stream of Fierce ideas, as evidenced by its appearance on the Fierce 15. Could we see them?

Vonage

At close of business on November, 14, Vonage had a market cap of $139 million and change. It almost seems to be begging for someone to come in, buy them up, and put a stake through the heart of its marketing expenses. A larger phone or cable company could conceivably roll them into existing marketing operations. But the buyer would have to be a serious Net Neutrality lover.

However, what would be a reasonable offer for the company when you toss in that $253 million of senior secured debt?

Yahoo

The ever-declining Yahoo does have the whole IM and voice services thing going on. If the stock price continues to drop, both Google and Microsoft are bound to take another look at the company. We also wouldn't be surprised to see a Fierce play by Verizon or another carrier.

Nortel's (latest) crash

Doug Mohney — Mon, 10 Nov 2008 10:47:31 -0500

How fast hope crumbles.

In June, Nortel was painting a rosy picture at its user conference. Nortel CEO and President Mike Zafirovski said the business was back on track and on the right trajectory for continued growth and improvements. According to Mr. Z, two years of transformation had taken root and yielded earnings, a better cost structure, and rebuilt leadership and its employee's faith in the company.

Today, about six months later, Nortel posted its biggest loss in seven years and is cutting back 1,300 jobs. The company posted a third quarter loss of $3.4 billion, including a $3.2 billion expense to write down the value of part of its business and deferred tax assets.

Nortel had a vision to move out of the hardware arena and become more software and applications orientated. In August, the company acquired Pingtel - now there's a snake-bitten company if there ever was one - and 3D positional voice technology company DiamondWare. Things seemed to be looking up as the company leveraged its relationship with Microsoft to extend its presence in the unified communications workspace and presented a growth path for its optical networking gear from 40G to 100G. Things were looking up.

Instead, as a part of a further reorganization - OK, what did you tell me in June, Mr. Z? - to save $400 million next year, travel has been frozen, salary increases have been ended, and four executives are being shown the door.

Among the departing on January 1 are CTO/Blogger John Roese and Chief Marketing Officer Lauren Flaherty. Roese coined and popularized the term "hyperconnectivity" and was big on promoting UC, one of the few bright spots Nortel had. Now he's working on his resume.

Will Mr. Z be next?

Compounding matters further, Nortel wants to unload its Metro Ethernet division, but everyone knows it and the global market downturn has reportedly driven the potential price in half.

Will Nortel survive as an independent company? It's hard to say, but the odds today don't look too good.

- Doug

Nortel's UC hospitality play

Pete Wylie — Tue, 28 Oct 2008 17:15:40 -0400

Nortel continued its aggressive expansion of UC offerings in the hospitality space Tuesday with the announcement of five hot customers that have created new revenue and improved guest experiences with Nortel solutions. Hotels and resorts with diverse customer needs and preferences have seen benefits in guest loyalty and staff productivity by turning up Nortel, according to the set of releases.

At the Venetian Hotel and Casino in Las Vegas, guests can now order tickets to shows and other events through a Nortel-powered contact center that also gives them personalized message capabilities. At the Shangri-La Hotel in Vancouver, Canada, where customers seek a very natural, "tech-free" experience, Nortel's solution runs behind the scenes, optimizing the staff's time to guarantee as much face time as possible with the guest.

Wes Durow, vice president of global marketing, said the hospitality industry is migrating to IP for a variety of reasons.

"We're seeing increased UC adoption in the hospitality space because it lets hotels and resorts give a new guest experience that is more personalized," Durow said. "We're also seeing demand because of increased productivity by staff because of IP communications and the new revenue streams that they are able to generate from the level of personalization the systems allow."

Sandra Thomson, hospitality marketing manager for Nortel, said the hotel's main goal of making a guest a repeat customer is at the heart of the migration to UC.

"You want the guest to come back, and little things like being able to greet them by name, or remembering the temperature they like their room can make that difference," Thomson said. "Also, when you have something unfortunate happen, like an overflowing toilet or something similar, the UC solution helps the hotel manager find the closest maintenance person who can help."

Durow said Nortel is able to better serve its hospitality partners than other companies offering UC because the company understands "that the relationship between a hotel and a guest is not purely transactional, it's personal." He also noted the reduced energy footprint of Nortel's solution as a plus mentioned by customers.

For more:
- see the releases at Nortel's website

Nortel adds SMB, medium business UC hardware

Doug Mohney — Tue, 07 Oct 2008 20:55:57 -0400

Unfazed by predictions of doom by market analysts, Nortel continues to roll out new products, this time aiming at the SMB and medium-sized business sectors with data and UC server offerings.

"We've been pretty vocal," said Nortel VP Wes Durow. "We've placed a bet, we're going to grow and invest in the enterprise space. We've been focused on the UC portfolio with Microsoft and IBM on the larger side... the announcements extend our UC story to SMBs."

The first product announced today, Nortel's Business Communications Manager (BCM) 450, is aimed at medium-sized businesses and will support up to 300 employees. It is designed, in part, to be a replacement box for "tens of thousands" of deployed Norstar systems. It will provide a growth path to IP while delivering UC and leveraging the existing investment in existing infrastructure, including cable and handsets. Durow said channel partners have been "very vocal" about the need to release the product and said it had been brought to market two months in advance due to channel demand.

UC features being delivered on the BCM 450 include unified messaging, meet-me conferencing for up to 120 participants, CTI integration for use with third-party applications and intelligent call center functionality. A message forwarding capability to direct voicemails and faxes to the most convenient desktop or mobile device is expected to be available in "one or two months."

On the data side of the house, the BSG 8 and 12 series are (almost) all-in-one devices combining the functions of wired and wireless switching, router, firewall, VPN and intrusion detection, SIP gateway with integrated ATA, and Quality of Service (QoS) prioritizing into one box. The QoS functional is described as application aware, so voice and video should get priority on the network over vanilla data traffic.

The BSG 8 can support up to 50 concurrent SIP sessions and the manufacturers suggested retail price is $1,316. The BSG 12 supports up to 100 concurrent SIP sessions and runs from $3,377 to $4,198, depending on configuration.

Related articles
NXTcomm08: Microsoft Announces Hosted UC solution; Nortel delivers first
Nortel sounds warning bell, may sell unit - FierceTelecom

Running into the sun

Thu, 18 Sep 2008 10:32:34 -0400

By Carl Ford

Please consider the lyrics to Jackson Browne's song "Running on Empty." Like Jackson Browne, I am not sure when the road turned into the one I am on.

Dialogic has been consolidating the industry, adding to its portfolio of assets with acquisitions from Brooktrout, Cantata, Eicon, Excel, Open Media, Snowshore and now NMSS on the platform side.

The result is a powerhouse of solutions that support internet, wire line and wireless applications. It also has a diverse portfolio that can become synergistic, supporting fax, voice, video and web-based applications.

Best of all, the complete portfolio has a sales force in all the markets: enterprises, carriers and application developers.

So I am positive about the synergies of the deal.

Now the reason Jackson Browne's lyrics came to mind. We are clearly in a slow down in telecom. Traditionally telecom is one of the first industries to go into a slowdown (Note to self: do not use politically charged terms with ridiculous definitions), and one of the last to break out of it.

It's hard selling in the space right now. I know sales are occurring and I am talking with my friends who are buying, but a lot of the work is based on internal consolidation.

So keeping a company looking good to the pressures of Wall Street is hard. Dialogic is a privately held company and that is a good thing these days. Making the numbers work in a down turn often creates a false pressure for results that are unsustainable.

Keeping a company profitable while focused on a down turn often requires the company to focus beyond the 10K and the next quarter's results.

Now on the NMS Communications side.

NMS Communication has been a tale of two companies in its financial reporting. One is a stable company that makes platforms, and the other is a new company called LiveWire Mobile that supports music and video content that can be personalized and integrated into your phone via ring tones and ring backs as well.

With the platform sold, only Livewire Mobile remains. Here is a company that provides the content platform that is needed to compete with the Apple iPhone iStore. If you believe that the iPhone is not the long tail but the trend, then Live Wire Mobile may be the platform you are seeking.

In my opinion, the Apple iPhone is an iPod that makes calls. It's not a phone. The other smartphone players are gearing up to compete, and it may be that Live Wire Mobile will be the beneficiary.

The expanded Dialogic also has a play in this game. The new video abilities it's developing, coupled with its wireless platforms, could bring them to a new level of competitiveness that can help the ISVs compete with Nortel and Alcatel-Lucent.

The good news about Dialogic being private is, "if it takes all night, that will be alright." And that makes me smile.

OnRelay embraces open source - with a surprise

Doug Mohney — Thu, 11 Sep 2008 11:21:04 -0400

OnRelay's IP PBX/mobile UC solution has moved to an open source platform and will be offered as a lower-cost hosted product. The company's use of sipX is an interesting surprise and likely to give warm fuzzies to Nortel, which bought sipX parent Pingtel less than a month ago.

In an interview earlier this week, CEO Ivar Plahte said the new platform allows OnRelay to offer its product at an affordable price points to the small to medium-sized enterprise. "The weakness of the IP Centrex model is that it's too cookie cutter," he said. "We can be the mobile PBX rather than the IP PBX."

OnRelay's MBX product is essentially a PBX for mobile phones, using a patented solution to autonomously route all incoming and outgoing mobile calls through an office phone system (hosted or managed). Plahte said that MBX can also incorporate desktop phones into its service, but his personal prejudice is to an all-mobile environment.

The new open source-based hosted MBX product is at a price point where a smaller service provider or an Internet Telephony Service Provider (ITSP) could simply throw a 1U appliance in a rack and start offering a PBX solution to a group of mobile users. "We think there's an opportunity for more lightweight, next gen telcos," Plahte said. "The model is more of an internet type. With a low entry cost, [a service provider] can put up a Linux server for the first customer, then continue to build customers."

OnRelay started reviewing options for a lower cost solution over a year ago, including Microsoft OCS and sipX. "We looked at [sipX] very carefully," Plathe stated. "It's a good piece of software, we had few problems integrating to it."

Plathe also discussed the implications of Nortel owning the Pingtel development team and controlling the future of sipX. "It's a double-edged sword in a way," said Plathe. "There's a benefit, a serious commitment, serious R&D on open source. Nortel continues to support open source platforms...The risk is Nortel starts acting like Nortel again, an anti-partner, very closed, very telco, Bellhead organization." Still, Plathe believes that Nortel will continue to embrace open source and move the sipX platform forward.

For more:
- OnRelay embraces open source. Release

Related articles
Nortel Buys Pingtel
OnRelay Picks the Green Fight

IP carrier market shrinks

Pete Wylie — Fri, 05 Sep 2008 14:45:04 -0400

IP telephony carrier market revenues decreased 10 percent in the past quarter to $861 million, according to a report released Thursday by Dell'Oro Group.

Greg Collins, president of Dell'Oro, said carriers eased investment in infrastructure due to the general U.S. market slowdown, instead preferring to earmark investment dollars that will produce revenue. Collins insinuated that constricting market conditions for carriers-caused by loss of fixed-line income and heated competition with wireless companies-led them to want to see more immediate and certain results.

Infrastructure investment may take time to show ROI, whereas other projects that carriers are diverting funds toward may generate revenue more quickly.

In the sagging market, Notel and Huwaei managed to grow their respective stakes. Huwaei continues to see excellent growth in Asia and EMEA, due to large-scale fixed-line installations. Nortel capitalized on strong sales to rural area in North America to fuel growth.

For more:
- see the Dell'Oro report on the sector

UC on deck for new Mets park

Dan O'Shea — Tue, 02 Sep 2008 15:04:47 -0400

Wi-Fi coverage and wireless ticket scanning are becoming increasingly common at sports stadiums, especially the newest arenas built within the last few year. Now, Citi Field, the new home of the New York Mets after they finish their last season in Shea Stadium this year, will have all that plus unified communications applications supported by Nortel Networks. The team's data center operations were recently moved from Shea to the new ballpark next door, and about 200 team employees are getting access to UC features such as voicemail and fax conversion to e-mail, flexible conferencing and VoIP.

Many of the team's ticket agents will be using VoIP gear for ticket sales, though the organization also will keep some agents on circuit-switched facilities as a back-up to VoIP. The Wi-Fi gear, also supplied by Nortel, also will allow concession orders to be placed by fans from their seats. Curiously, it doesn't look like the crosstown Yankees have said much about telecom-related amenities going into their new stadium. Maybe that money went toward A-Rod's salary.

For more:
- see this story at Computerworld

SPOTLIGHT: Nortel Buys Again

Doug Mohney — Thu, 21 Aug 2008 16:58:54 -0400

Nortel has purchased 3D positional voice technology company DiamondWare. It's the second Nortel acquisition in as many weeks.

Nortel gets 3D audio technology to help create "real life" virtual communication experiences on the web and in conferencing. DiamondWare's technology uses wideband, stereo capabilities and custom spatial positioning. The technology lets each individual "hear" other participants in relation to how far away they are in a virtual space. It also allows participants in a virtual game or meeting to engage in private conversations.

Nortel is going to incorporate DiamondWare's technology across carrier and enterprise portfolios to enhance its multimedia, voice conferencing and VoIP solutions, plus cook it into "advanced research projects" such as a 3D web networking solution as part of the company's incubation program.

Bottom line is, Nortel gets some very cool strategic technology it can put into anything that uses audio. The DiamondWare buy also highlights the fact Nortel is not shy these days to spend some cash to acquire software when they need it, a la the Pingtel acquisition a week ago.

Under the terms of the agreement, DiamondWare gets $7 million in cash up front. Nortel will put out up to another $3 million to DiamondWare security holders based upon meeting future business milestones over the next 40 months.

For more:
- Nortel buys DiamondWare announcement
- Analyst/Blogger Jon Arnold all over the Nortel/DiamondWare relationship

Related stories
Nortel Buys Pingtel
Nortel's Return From Doom

Nortel Buys Pingtel

Doug Mohney — Wed, 13 Aug 2008 11:36:36 -0400

Nortel has bought Pingtel, a subsidiary of enterprise mobility firm Bluesocket. The open source IP PBX software/appliance division will hopefully have better luck moving forward.

Financial terms of the deal have not been disclosed, but Nortel will acquire the key assets of Pingtel from Bluesocket, Pingtel's existing OEM relationship with Nortel will be brought in house and Pingtel employees will be integrated into Nortel's Billerica, Mass. facility. Pingtel and Nortel have been working together for a while on SIP-based enterprise solutions.

For the self-described "software-centric" Nortel, the acquisition adds to the company's R&D and software development capabilities. The new software capabilities are expected to help Nortel deliver unified communications solutions to enterprise customers in all segments. In the near term, Pingtel software pieces will appear on Nortel's SMB unified communications solution.

Pingtel's sipX open source IP PBX software is highly regarded for its ability to scale to support up to 10,000 users; as an independent entity, Pingtel landed Amazon.com as its largest publicly announced customer. The Amazon.com installation reportedly supports over 5,000 users in a high-availability configuration.

However, Pingtel's business history has been irregular. The company started out as an IP phone manufacturer, before ditching hardware to focus on software and sipX development. In 2007, the company actively sought a buyer, with Bluesocket finally acquiring them in July 2007.

For more:
- Nortel buys Pingtel announcement

Related articles
Nortel's Return From Doom
Bluesocket plugs-in to Pingtel

A Glass Half Full

Doug Mohney — Wed, 16 Jul 2008 15:12:41 -0400

Trying to figure out how the price of oil, rising prices, and a code orange financial sector will affect the IP communications industry is a crap shoot. Some analysts are looking towards the Aug. 7 release of Acme Packet's (downward) revised financials as being the bellwether for the rest of the industry, but I'm not so sure if I buy into that idea. If Acme, Cisco and Nortel are down, then maybe we should consider some further thought.

In (quite arguable) theory, there's some good news this week to ponder.

The good news: Intel announced a 25 percent increase in profits this week and sees continued strength going into the third quarter as its chips go into more mobile devices, with laptops now outselling desktops. Mobility desires broadband connectivity, so the wireless companies should be OK, especially with people falling all over themselves buying 3G iPhones. Going into the data center, Sun is predicting a good fourth quarter so people are still upgrading and/or adding servers at a healthy clip.

Analysts argue that consumer electronics, are relatively insulated from the ups and downs of everything going on because everyone "needs" their tech fix and prices continue to drop.

And (in theory), the higher price of oil should lead to more telecommuting as people try to cut down on their gasoline bills and avoid traveling the increasingly expensive skies. Go price plane tickets for September travel and tell me it's not a wakeup call.

So, what do you think? Time to buy some gold? Or just chill a little?

- Doug

Indonesia Conglomerate Gets UC

Doug Mohney — Sun, 06 Jul 2008 22:00:15 -0400

The Bosowa Corporation has received a unified communications solution from Nortel and Microsoft to service more than 5,000 employees across 30 subsidiaries across the country.

Bosowa started off as a Mitsubishi dealer and has grown into a conglomerate with businesses including car retailing, infrastructure development, financial services and project management in the engineering and construction industries. The company is implementing a joint solution from Nortel and Microsoft that includes Nortel's CS1000 running Microsoft OCS 2007 and Microsoft Exchange 2007.

Benefits cited from the solution include faster decision-making, better business-critical processes and enhanced collaboration for the growing number of Bosowa staff spending time out of the office. Mobile workers and distributed offices mean more people traveling for the company and a need to bring them together regardless of where they are at on any given day.

For more:
- Nortel/Microsoft Indonesia UC project posted by CNNMoney.com

Related articles:
Microsoft Announces Hosted UC solution; Nortel delivers first
Social Security's VoIP and UC Future

Avaya, Cisco and Nortel Patching VoIP ASAP

Doug Mohney — Tue, 24 Jun 2008 22:48:49 -0400

VoIP customers of Avaya, Cisco and Nortel should be on the lookout for patches today by 12 p.m. EDT to correct security vulnerabilities discovered by VoIPshield Laboratories.

According to Network World, VoIPShield earlier found and quietly reported the problems to the three vendors to give them time to develop patches for the flaws. Details of the vulnerabilities and vendor fixes are scheduled to be released in a simultaneous announcement between the three VoIP vendors and the security company. Two of the three vendors are expected to issue patches with the third to issue an advisory.

Vulnerabilities found affect VoIP PBXes and softphone software. If exploited, consequences could include remote code execution, unauthorized access, denial of service, and information harvesting.

Avaya, Cisco and Nortel were chosen by VoIPshield for testing because they represent the bulk of IP PBX sales in North America. Microsoft has been included in the next round of testing with results expected to be announced in about four months.

For more
- Network World reports Avaya, Cisco and Nortel VoIP vulnerabilities

Related articles:
Newport Networks Riles Up VoIP Security Fears
Circle the wagons, enterprise VoIP is under attack
Nortel Adds VoIP Security Thru SecureLogix

NXTcomm08: Microsoft Announces Hosted UC solution; Nortel delivers first

Doug Mohney — Tue, 17 Jun 2008 23:46:05 -0400

NXTcomm08, Las Vegas--Microsoft announced a fully hosted unified communications (UC) solution, with Nortel leading the way on delivery.

Microsoft Solution for Hosted Messaging and Collaboration (HMC) 4.5 gives service providers a platform to deliver communications to small and medium businesses (SMBs). Microsoft has signed up a number of partners to enhance HMC 4.5, including BroadSoft, Ensim, Nortel and Sylantro Systems. Partners have built solutions to cover a wide range of capabilities from advanced voice capabilities to hosting automation tools, as well as consulting practices for solution deployments, upgrades, and more customization.

Nortel, Microsoft's best buddy for UC partnering, is delivering the first integration with HMC 4.5 for a fully hosted carrier solution for SMBs. The hosted solution is based upon Nortel's CS 2000 softswitch with HMC 4.5 on top of it. SMBs can get a hosted solution that combines voice with Microsoft's collaboration services such as click-to-call, click-to-conference, missed call email messages, mobility and telephony presence.

For more:
- Microsoft announces HMC 4.5
- Nortel delivers hosted HMC 4.5 solution for carriers

Related articles:
Microsoft gets into unified comms
Nortel welcomes Microsoft's OCS

Clearing the UC Fog

Doug Mohney — Wed, 11 Jun 2008 13:38:05 -0400

Over the past few weeks, the fog around unified communications has started to clear. Vendors are making a step-by-step process to move from the abstract "Well, you've got VoIP and the IP PBX, let's throw in presence and email and the kitchen sink" pitch to honing hard-core reasons to invest in UC.

Certainly, UC in the contact center has been around for a while. CosmoCom wants to make just about everyone in the organization a contact center asset and has added mobility features so you can grab someone out of the office through their cell phone. It's a radical way of rethinking the traditional way companies have dealt with answering knowledge questions and I suspect there's going to be some social engineering involved along the way in implementing this model. Sometimes there are very good reasons why you have to go through three layers of staff before you reach the in-house guru, least of which is that the guru may not be the ideal guy you want to talking to an aggravated customer.

Business-optimized communications will be the hook to many companies, but there are two hurdles involved. The first step is going beyond the "Gee whiz" phase and putting together a trial to measure effectiveness and fine-tune the melding of business processes and UC technology. Nobody's got a straightforward ROI calculation to offer up, so a carefully constructed trial seems to be the best way to make believers out of executives. Finding the money is the second step; Nortel has indicated some companies are squeezing the hardware budget a bit to shake loose enough coin to buy software on the theory it's better to UC-enable some groups/products rather than sprinkle VoIP around everywhere without getting full benefits for the dollars spent.

We'll be spending plenty of time discussing these issues at our UC event at NXTcomm. If you have the chance, please join Dan O'Shea, Carl Ford and me on June 18 and 19 in Las Vegas.

- Doug

Countdown to NXTcomm; a look back at Nortel

Doug Mohney — Sun, 08 Jun 2008 21:59:41 -0400

My calendar this week is chock-full of pre-NXTcomm briefings while my schedule next week is going to be much more challenging between meetings, the Fierce UC event and trying to find time to go the Tuesday evening networking event Fierce is holding at the Palms.

I am pleased to announce Carl Ford will be joining us at NXTcomm, so if you see Carl running around, tell him "Thank you." Carl will be moderating panels at the UC event on Wednesday and Thursday and my advanced thanks to him and Gary Kim and Dan O'Shea for their help.

My head is still swimming from Nortel's press event last week. I'm not quite ready to buy into the marketing-type of hyperconnectivity, but I'm more than willing to agree with the concepts of "communication enabled applications" and "business optimized communications." The former is pretty self-evident; adding in voice and video and presence into applications while the latter is much more powerful.

Business-optimized communications is a much more clear-cut term that appeals to the heart of every C-level position. Unified communications is a generic term most companies struggle with because they want to see a clear ROI on a unified communications investment. Nortel is seeing success by bringing businesses into their facilities, getting them to focus on a particular function, and then having customers conduct a 50- or 500-user trial that turns into a 1,000 or 5,000 or larger implementation in short order.

In my way of thinking, Nortel is using UC as the camel's nose in the tent. Once the nose is there, the rest of the camel is soon to follow.--Doug

The Nortel Energy and Charm Offensives

Doug Mohney — Sun, 08 Jun 2008 21:29:30 -0400

Last month, Nortel launched its "ruthless" Cisco Energy Tax campaign at Interop. More recently, the company has engaged in a sustained charm campaign to woo the analyst and press communities in order to generate positive buzz.

Nortel says that, kilowatt for kilowatt, its data center gear outperforms comparable Cisco equipment in 50 percent lower energy consumption; not to mention it's faster, more reliable and less expensive. The Tolly Group has backed Nortel's claims and has over 50 testimonial claims from customers who have ditched Cisco and gone over to Nortel. And Nortel wants to buyers to know that its LAN gear is purpose-built for unified communications (UC).

Nortel's charm campaign started last month at the grass roots level, rolling in a group of bloggers to Ottawa to let them see the latest R&D they have going on. Last week, a larger group of press and analysts were flown into Dallas to engage in a larger set of briefings outlining Nortel's UC strategy. The backdrop opulence of the Gaylord Texan Resort didn't hurt matters much; but a first-day separation of analysts and media did raise some eyebrows.

During the Dallas presentations witnessed by this reporter, the Energy Tax campaign was highlighted, complete with slides showing what happens if you put "Cisco Energy Tax" into Google (the exercise is left to the reader).

For more:
- Jon Arnold's blog posting on The New Nortel
- Nortel Buzzboard tells you which bloggers they wooed

Related articles:
Nortel's Return From Doom
Nortel: $23 a share?

Nortel: $23 a share?

Doug Mohney — Sun, 08 Jun 2008 10:53:48 -0400

Over the past few months, Nortel has been conducting a concerted effort to woo press and analysts. The payoff has started, with one firm setting a near-term target of $23 a share for Nortel's stock and a longer-term prediction of $50--Nortel closed at $7.66 a share on Friday.

Canadian-based Paradigm Capital says the stock is due for an uptick since the company currently has a $4 billion market cap but $11 billion in revenues, with analyst Barry Richards calling the stock "profoundly undervalued today." Richards says the company is being valued at half of FY08 sales and 4.7 times EBITDA while industry averages run at one times FY08 sales or 10 times FY08 EBITDA.

Nortel is also cleaning up a $2.4 billion shareholder global class action suite, so that should remove a "significant overhang" for future progress. Paradigm has rated Nortel a Buy, but 24/7 Wall Street notes that a 200-percent gain in the company's stock is either one of the "gutsiest ... or craziest" calls that could be made.

For more:
- Nortel Update: Paradigm Capital Is Bullish,
- 24/7wallstreet.com asks if Nortel at $23 is gutsy or crazy?

Related articles:
Nortel's Return From Doom
Nortel begins world's biggest VoIP rollout

Social Security's VoIP and UC Future

Doug Mohney — Tue, 03 Jun 2008 23:34:20 -0400

INNUA Global Connect 2008, Grapevine, TX - Tom Hughes, CIO of the Social Security Administration (SSA) and one of Nortel's most important customers, said the agency is moving into a future that it doesn't fully understand given the rapidity of technology changes expected in the coming 10 to 15 years.

As the government agency entrusted with distributing 45 million checks per month and $700 billion annually to retirees, widows, and children, SSA currently has an aging telecommunications infrastructure incorporating a mix of TDM technologies from four different vendors. It is also adding new customers at the rate of 365 per hour with an expected 80 million people to receive social security in 2030. The agency has 1,600 offices spread around the country and moves about 150 offices a year.

Long term, SSA is moving to consolidate all their communications to IP, including voice, fax, email, video conferencing, and mobile devices, as well as better managing the network infrastructure. Understanding unified communications within this context is a challenge given the types of information the agency has to work with, such as collecting 1.5 million medical records a day with over 2 billion records on file.

The biggest challenge for SSA is IT security. The agency gets high scores for security practices, but Hughes freely admits that you can't plan for all possible risks in an IT environment now that's its IP-based. VoIP will be carried on an intranet, but further challenges come when third parties outside of SSA need to access data.

"We can't predict all the answers, so we want to start with success," said Hughes, indicating the need to start with steps that are easy to implement and then moving to more difficult challenges. "Once it's up, it is 'Can you do a little more? I want more stuff through this environment.'" Podcasting is one potential area where the technology pieces will enable better service.

Related articles:
Nortel begins world's biggest VoIP rollout
SSA Gets NetIQ for VoIP

Nortel's Return From Doom

Doug Mohney — Tue, 03 Jun 2008 18:38:29 -0400

INNUA Global Connect 2008, Grapevine, Texas - Speaking before its user group today, Nortel CEO and President Mike Zafirovski said the business is back on track and on the right trajectory for continued growth and improvements.

Two years ago, Nortel was in bad shape and launched a transformation plan to cure the company. At that time, the INNUA Nortel user group posed a series of five questions to the telecommunications vendor asking how the company would regain its tech edge, improve quality and operators, and "How do you plan to recover Nortel's luster?" Zafirovski was quite blunt about the last question's true meaning: "When can I stop making excuses to my bosses when I choose Nortel?"

Compounding matters, Nortel was "losing market share in every segment, not cost competitive, and had losses in four of the previous five years," said Zafirovski. The rest of the industry seemed "solid and predictable" when it came to delivering product.

In the two years that have passed, Nortel's transformation plan has taken root and yielded earnings, a better cost structure, and rebuilt leadership and its employee's faith in the company.

Zafirovski made three commitments to the user group audience, saying Nortel would continue building market and customer momentum, even in today's financial environment, drive earnings growth ahead of the market, and continue to make process on the fundamental health of the company.

Nortel sees opportunity in the proliferation of "true" high speed broadband and communications-enabled applications. Hyperconnectivity was once again bandied about, as Zafirovski cited the 1.6 million mobile phones added every day, 5 billion mobile network points expected by 2010 and 10 billion microprocessors to be sold this year.

The company's growth strategy is aligned on the "megatrends" of enterprise TDM moving to VoIP and ultimately to UC and the proliferation of next generation mobility and convergence. Businesses will be optimizing their communications while 4G and video drive carrier expansion.

Nortel has adjusted their R&D investment strategies. Two years ago, the company was spending 55 percent of their R&D dollars on their legacy lines; now it's at 20 percent. Instead, the company now puts 60 percent of their R&D into growth and mature product lines and another 20 percent (up from 10) into emerging technologies. Around 70 percent of the current R&D spend is around software products.

In addition to reworking its R&D spending, the company is simplifying its supply chain and intends to spend more money on marketing.

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