Bill Owens, the new president of Nortel Networks, is surprised by the high degree of loyalty that carrier and enterprise customers show for his company. He’s also surprised that a moniker he’s been trying to shake for years continues to stick.
“I’ve been trying to shed that ‘admiral’ piece for the better part of 10 years,” he said, speaking at the Canadian Telecom Summit, a conference held in Toronto on June 16 and 17.
Despite his efforts to be known as something other than some sea-going senior — the name’s a holdover from his career in the U.S. navy — Owens continues to carry that identifier. He also carries the burden of explaining where the Brampton, Ont.-based network-gear maker is headed as it navigates some rocky economic shores — waters well-churned by the firm’s recent financial problems.
In April, Nortel announced that it would have to correct a substantial number of its financial statements. Fiscal quarters in question included all of 2003, when the company reported a net gain, but in fact should have recorded a loss. Nortel fired CEO Frank Dunn, CFO Doug Beatty and controller Michael Gollogly. The company then appointed Owens, a Nortel board member, to the top post.
At the Summit, Owens seemed optimistic about Nortel’s future, saying that the financial situation “will pass,” and “we will do this the right way” — meaning ensure the company has “financial accountability second to none.”
Owens also said the network equipment market is headed for a serious consolidation, but as the big-fish gear makers swallow the industry minnows, Nortel means to be seen as a trout with teeth.
“We will be the consolidator, not the consolidatee,” Owens said. When asked directly if Nortel would move into acquisition mode, he answered by saying, “We need to be ready to do the right thing,” and, “There are a lot of opportunities for us.”
Owens said Nortel is focused on wireless network technology, but he also pointed out that the firm sees Internet protocol (IP)-based equipment as the way of the future. During a discussion with select media after his keynote, Owens told IT World Canada that Nortel plans to invest a lot of research and development dollars in deep-packet inspection technologies.
“It is no longer just a world of IP,” Owens said. “It is now a world of the intelligent packet. Deep packet inspection allows us to truly deliver five-nines reliability. Right now we are paying a lot of attention to (research and development).”
Owens said equipment for enterprises and new wares for carriers coming next year would likewise drive the firm’s growth.
That confused one Summit attendee, who requested anonymity. He said Owens seems to have trouble pinpointing just which one of Nortel’s myriad business lines would be the prime growth driver for the firm in the future. However, the attendee also said Owens “seems to have a fairly level head” and “speaks with integrity.”
And Owens said he understands that Nortel has a lot to prove in order to regain the trust and positivity of its existing and potential customers, although he said he has not heard first-hand negative expressions from the market.
“I have heard the rumours, but I have not heard a single (customer) who has talked to me about that. I am surprised I haven’t heard more,” he said.
As if to hammer that point, on Wednesday Nortel announced it is providing dense wavelength division multiplexing (DWDM) to Bell Canada. The carrier has deployed Nortel’s Optical Networks Optical Metro 5200 Multi-service Platform — which features metro DWDM — in order to offer enterprises optical broadband services including optical storage connectivity over shared infrastructure, as part of its high speed metro (HSM) service.
According to the companies, the HSM service will allow Bell Canada to offer its enterprise customers high-performance optical connectivity for business continuity and disaster recovery capabilities through different service interfaces including Fibre Channel, ESCON, FICON and gigabit Ethernet, as well as a range of voice, video and mainframe protocols.
In addition, the Canadian Imperial Bank of Commerce (CIBC) announced it has selected Bell Canada’s HSM services as the facilitator to consolidate its storage server infrastructure in its Toronto data centres. Through the HSM and Metro 5200 technology the CIBC hopes to reduce the number of its storage servers it is currently using by almost 50 per cent, which will in turn reduce operating expenses.
Despite customer loyalty, things are far from full-speed-ahead for Nortel. While the company struggles to lose the unstable stigma it has carried around for the past two-plus years, Owens is playing the politically correct leader role to a tee. Not only is the Admiral visiting customers around the globe, he is spending time with his employees to understand their feelings about the company.
“Morale is surprisingly very good internally,” Owens said. “I cannot tell you of another company that has more loyalty (from its employees). That is not to say everyone is happy, but generally turnover is low.”
Owens said Nortel is making headway with its financial restatements, working with Ernst & Young as well as auditors Deloitte and Touche LLC. Although he didn’t provide a date for the filings, he pointed out that the company requires an independent auditor to go through the information first. It’s difficult to predict how long that part of the process will take, he said.