Nortel will stick to core voice business

Nortel Networks Corp.’s bankruptcy should not faze customers, current or potential, any more than any other Nortel troubles over the last 10 years.

Notice I did not say Nortel’s bankruptcy shouldn’t affect purchasing decisions. What should be a concern to anyone using, or thinking of using Nortel’s products is the breadth of products. If you go to the manufacturer’s Web site, you will find 19 current products and eight discontinued products. And that’s only those beginning with the letter A.

Nortel’s offerings include private branch exchanges, carrier switches and routers, call centre management, firewalls, intrusion prevention systems, media gateways, base station controllers and receivers, wireless LAN gateways and switches, plus carrier CDMA equipment. Which products will the company still offer at the end of 2009? We already know the metro Ethernet division is up for sale, but Nortel is going to drop more products in its other product lines.

This is not a prediction of what CEO Mike Zafirovski is planning. It’s a prediction of what Nortel’s creditors will impose on the company after they take control. In bankruptcy protection, what typically happens is the bondholders become shareholders, and the bondholders will be powerful enough to appoint directors and will be smart enough to appoint directors who know something about telecom. These directors will look at the full breadth of offerings and decide there are too many products for a bankrupt company.

My guess is Nortel will continue offering PBXs and call centre products for enterprise customers. Whether they offer anything else remains to be seen. So far, CEO Mike Zafirovski is on the right track in correcting problems that originated long before his arrival. Deciding on a core competency and focusing only on that will be the first step in pulling out of the financial rut.