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Nortel: Dead or Alive, Will Anyone Want to Be There?

Bankrupt Nortel Networks has received court permission to push its restructuring deadline to April 23.

The extension comes amid renewed speculation over how Nortel will look, once it closes the insolvency proceedings. And of course, the real question is whether the once-venerated company will emerge as anything other than a tarnished name.

Franz Dzubeck, head of consultancy Communications Networks Architects, told Computerworld he thinks Nortel is done. The gear-maker “is part of the history of the 20th century,” he told the publication. “And it’s not going to be part of the 21st.”

There’s good reason for the sort of pessimism. The hardware infrastructure business is a scrappily competitive one and long-timers are suffering serious blows from low-cost entrants like Huawei Technologies and ZTE Corp.

Plus, more enterprises and businesses are turning software platforms – think unified communications and IP PBXs – to save money on their communications bills. Service providers still have to install equipment, to be sure, but even much of those deployments are going to IP. Yes, the Nortel portfolio includes IP products – that now belong to companies including Ericsson, Avaya and Ciena, thanks to the auctions conducted throughout 2009.

Thus, what remains at Nortel mostly is intellectual property – and a stigmatized brand. Analyst Zeus Kerravala at Yankee Group addressed that matter with Computerworld. If Nortel does anything with its remaining assets, it’s going to have to operate under a different name, he said.

“Too much damage has been done,” Kerravala told Computerworld. “Whatever’s left, you wouldn’t want to rally around that.”

And whatever’s left, it’s a safe bet not many Nortel workers – current or former – would be willing to rally around a Nortel name either. They’ve been burned too many times by management. But, as Canada’s leading high-tech talent, what are their options?

There may be welcome news on that point. Canadian billionaire Terrence Matthews said this week he’s starting a $100 million investment fund to develop new companies to take Nortel’s place. Matthews told attendees at a technology association gathering he’ll focus on small firms as well as billion-dollar players that make advanced wireless and communications software.

So perhaps the issue isn’t whether Nortel is dead, but who and what will rise from its ashes.


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