Nortel Networks Discarding its None-core Assets

Nortel has announced a deluge of things in November. A new
work plan. A new senior management team which will lead the company wef 1
November 2001. And agreements with C-MAC Industries Inc and Amdocs, among many
other things. The common thread for all these activities is a clear indication
of the re-molding activity happening at Nortel.

First, the announcement of the senior management team. Former
CFO Frank Dunn takes over as CEO from John Roth. And the senior management team
comprises of Terry Hungle, former president, finance, for Nortel Networks
Americas as the new CFO. And three product presidents Frank Plastina, former
president, service provider and corporate networks, is appointed as president,
metro networks. Greg Mumford, former president, optical Internet is appointed as
president, optical long haul networks. Pascal Debon, former president, Europe,
Middle East, and Africa, is appointed president, wireless networks. The message
is crystal clear: to be focused around three major areas–optical long haul
networks, wireless networks, and metro networks. The key change has been that
the intelligent Internet, enterprise networks, circuit-to-packet, metro optical,
circuit switching, and global networks, all come under one umbrella of metro
networks.

Second, it announced that it has entered into an agreement
with C-MAC Industries Inc under which the latter will purchase most of the DMS-related
manufacturing activities, currently performed in the company’s Systems House
in Research Triangle Park, North Carolina. It also proposes to divest C-MAC
similar manufacturing activities performed in its Systems House in Monkstown,
Northern Ireland. The transactions include the sale of associated equipment and
inventory. Nortel Networks also entered into an agreement to substantially sell
all its clarify assets to Amdocs Ltd, for $200 million in cash. This includes
patents, intellectual property and trademarks. Explains Ravi Chauhan, VP, India
and SAARC, enterprise solutions, Nortel Networks, "The sale of the clarify
assets is a part of Nortel Networks’ work plan to streamline our business
around our core market areas, aligning our cost structure and focusing
investments to deliver the key next-generation solutions in those areas".

Though there have been changes in the focus, the larger
question is about discarding the products and support to the customer. The
opinion is that things will be done in-line with its work plan. For example, it
sold its access and DSL gear. Commenting on clarify, Chauhan elaborates further,
"This sale relates only to the clarify business. Nortel Networks is
maintaining customer contact and self-service center businesses. The customer
contact and self-service business is an integral component of our strategy. It
will deliver applications that would enable corporate accounts (enterprises) to
effectively reach to our customers. We have held a leadership position in both
the categories for quite some time, and plan to continue to build on our
momentum. These solutions are the key for businesses that must touch and service
their customers, and it is therefore essential to building customer loyalty and
ultimately, profitability."

These factors ascertained earlier, clearly seem to be a step
ahead in boosting Nortel’s fiscal and market position. And the bringing of an
ex-CFO to Nortel’s top-slot and its clear focus on the key businesses, signals
possible breakthrough.

Ch. Srinivas Rao