Summary
1. Nortel’s CEO is offering some disingenuous spin. 2. It was his failure to adapt the company’s strategy to a much more targeted one that resulted in an impossible mission. 3. Nortel was lucky to get as much as it did for the wireless assets.
Analysis
When reflecting on its historic experience, Nortel’s modus operandi has been to either engage in revisionist history or to simply ignore it. It is just not true that there was widespread pessimism about Mike Zafirovski’s opportunity to make significant changes in the right direction. In fact, in 2005, there was extensive optimism in the analyst community about the new CEO. He just did not come through with his pledge to have a “clear strategic focus."
In early 2007, we wrote: “Unfortunately Zafrovski would rather over-swing for the homerun than go for the more assured singles and doubles.” It was his lack of ability to appreciate the conservative market dynamics of the telcom industry that gave the company no chance to turn things around.
On the recent purchase by Nokia, they do call them fire sales for a reason. The handwriting was on the wall when earlier this year, Nortel sold its layer 4-7 application delivery business for under $20 million.
