Nortel’s Hackney is also seeking a claim against Nortel. And he’s still President !!

It gets even more humorous. Actually unbelievable.

I copied this from the National Post’s Friday edition …
Several executives who left Nortel during the Zafirovski years have filed, including Sue Spradley, Steve Schilling, Steve Slattery, Mike Pangia and Dennis Carey.

Also putting in claims are several people still on the payroll, including management team members Peter MacKinnon and Joel Hackney. Numerous other executives filed claims earlier for millions of dollars.

Wait a second. Let’s rewind. I’ve got to read this again.

Also putting in claims are several people still on the payroll, including management team members Peter MacKinnon and Joel Hackney.

Wait, isn’t Joel Hackney the President of Nortel Enterprise Solutions ?

Yes, he is. He is STILL the acting President of Nortel’s Enterprise Solutions.

I wrote a post yesterday wondering how the former CEO, Zafirovski, who just resigned from Nortel in the last few weeks, could have the audacity to file a claim for damages against the very company he helped put under. Well, at least Zafivorski waited until he left the company.

Hackney is still the President. Acting President. And he’s filing a claim, while President, against the very company that’s employing him, the very company that he, and his very senior skilled team of highly qualified management professionals put into bankruptcy. NORTEL.

So, how much is his claim for ? It appears that he’s looking for $55,388.55 in retirement contributions.

How do people get away with this ?

Why isn’t this making the news ?

Why isn’t anybody else writing about this ?

Isn’t there a conflict of interest ?

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Appaling. Zafirovski is disgracing the remnants of Nortel. He should be sued.

Every once in a while you come across a business story that makes you shake your head in disgust. The entire Nortel debacle is one of those stories. Mike Zafirovski suing his former employer is another.

Read on …

Canada’s flasghip Telecom, Technology, AND business has been wiped out. Granted, Nortel was in major distress when Captain Zafirovski took over, but, he effectively put the company under.

It’s obviously quite easy for me to sit in judgement of the awful business decisions made by Zafirovski, and of course, hindsight is always 20/20, so it’s easy to look back and question. Fact is, he didn’t move quickly enough to shore up Nortel’s core competencies. He should have sold many of the core business assets when he had the chance, taken the cash, and strengthened a few of the business units. Sacrifice some to save the others. Instead, he stubbornly hung onto all of the assets and fought like hell to keep up.

And he failed.

Fact is he was the captain of the ship. And the company went down while he was at the helm.

Now he’s left many former employees without a job, pensioners without a pension, and Canada without it’s once flagship company.

What’s got me pissed – AllAboutNortel.com posted an article yesterday stating that Zafirovski has filed a $12.2 million claim with a US Bankruptcy court asking for 24 months of salary, $3.6 Million in bonuses (and on and on). DISGUSTING. APPALING.

What right does he have suing the very company he helped put under ? He sank the place, and now he’s staking claim. If there isn’t already, there should be a law against someone benefitting from their own bad deed. There should be some corporate culpability.

The receivers should sue Zafirovski for negligence. Was he negligent ? Might some of his bad business decisions be considered negligent ? Can you sue a former CEO for bad decisions ?

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Who owns Nortel ? A response from Mark Goldberg

Over the course of the last 3 months while maintaining this blog I have had the opportunity to meet and collaborate with some very dynamic and certainly well versed individuals. Yesterday I published a blog posting titled “Who owns Nortel ? I say the Canadian taxpayer. Why ?” I had written this posting as a rebuttal to a posting that Mark Evans from AllAboutNortel.com had done on Monday. Mark Goldberg, (who hosts the Canadian Telecom Summit and maintains his own blog), took the time to rebut my posting with the following comment. I am re-posting Mark’s comment below:

There are a number of problems with thinking that the Canadian taxpayer owns Nortel and that the government should have intervened in Ericsson’s purchase.

Not the least of these problems is the fact that much of Nortel’s intellectual property stayed with Nortel – the Ericsson deal licensed the intellectual property on a non-exclusive basis. Let’s also keep in mind that for years, Nortel has not been able to take advantage of tax incentives, since they haven’t been profitable, so the cash exposure to taxpayers has been less than many think.

Does Nortel (and its owners) own the company’s assets or does the government seize possession by virtue of having ever provided a tax incentive or benefit? To simplify the thinking on this point, let me ask if you continue to own your home or does the government now get a piece because you take advantage of a home renovation tax incentive?

The xenophobic views on foreign ownership (nationalizing assets if acquired by a foreign company) are outdated. Modern societies encourage foreign investment. Canada’s own industrial policy and numerous treaties ensures that we don’t discriminate in the manner you propose; after all, we provide tax credits for R&D performed in Canada by Canadian firms and similar benefits are paid to those that happen to be foreign owned. Why wouldn’t we? The point is that Canadians are working in attractive R&D jobs.

Ontario recently gave more than a quarter of a billion dollars to recruit a foreign gaming software company. Ericsson didn’t ask for cash handouts and it is maintaining skilled jobs in Canada. The Canadian taxpayer will continue to benefit from payroll taxes being remitted to both levels of government, in addition to property taxes, and all sorts of economic benefits from having stability for these employees.

There was no “pilfering” of any public or private assets – the sale conformed to the law with judicial oversight.

On the other hand, political interference would have sent a message to the investment community around the world that we are no better than banana republics that change the rules and nationalize assets on a whim. Just imagine the impact that would have on jobs, investment, the dollar, stock prices.

The government got it right by looking at the big picture and resisting the temptation to score short term, cheap political points.

Who owns Nortel ? I say the Canadian taxpayer. Why ?

Does an organizations intellectual property belong to the organization itself ?

That depends on how much of the intelectual property was funded using taxpayer dollars. The amount of ownership should depend on the percentage of government grants that the organization used to to build the intelectual property in the first place.

If the Canadian government hands out billions of dollars to a Canadian company and assists that company in developing their intellectual property with R&D tax credits, tax grants, and EDC loans, then that property is NOT, and should not belong to the sole domain of the organization itself. Technically, the Canadian tax payer helped fund the business. As long as the business remains in Canadian hands then the property belongs to the owner / shareholder. And as soon as the assets are sold to outside foreign interests then this property should revert, (as a percentage of the total amount “donated”) back to the Canadian taxpayer. Furthermore, there should be laws in place that protect the Canadian taxpayer as a secured creditor in the event of a foreign sale or bankruptcy.

The US government is standing in line with their hands open, waiting for their billions in proceeds from Nortel’s bankruptcy sale.

Where is the Canadian government and why aren’t they protecting Canada’s interests in the Nortel debacle ?

At this point it’s probably too late to deal with the Nortel issue – they’re done. But, this philosophical discussion should be happening at senior levels of our bureauracy.

Why am I bringing this up ?

I read a post on AllAboutNortel.com yesterday, and I quote Mark Evans:

Second, the federal government made the right decision when it decided not to review the Ericsson’s deal. The CDMA business was not of “national interest” so it made little sense to review it.

Mark references a Bloomberg article which states Michael Ignatieff as follows:

Canada needs an investment law “that protects our national interests” Liberal Party Leader Michael Ignatieff said today at a speech in Toronto. Conservative Prime Minister Stephen Harper “dropped the ball” when the government declined to review Ericsson AB’s purchase of some Nortel assets, Ignatieff said.

Mark – YOU ARE WRONG. Canada made the WRONG decision when it decided not to review the Ericcson deal. This is Canada’s asset – it belongs in many respects to the Canadian tax payer. Well, not entirely, but, we are entitled to our fair share of this asset. We should be waiting in line, ahead of all of the other creditors. We should be protecting our intellectual asset, and if it gets pilfered in a bankruptcy then we should review the process.

Don’t you think ?

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Time is not on Nortel’s side: An appeal to the US, EU, and Cdn Govt’s to expedite the process

The future of Nortel is now in the hands of the Canadian and EU governments, as well as the US Department of Justice.

The objections from Verizon have been rejected, but the fate of Nortel is still in limbo waiting for regulatory approval, and it’s important for the regulators to realize that the waiting will only hurt the sale process. If any individuals reading this blog have a say in the regulatory process, please step in now to help ensure the sale of this potentially diminishing asset.

The DoJ needs to determine how to measure the marketing power that this integration creates. If they look at the whole North American market, including small and mid-sized products, the impact isn’t as severe. But if you “slice and dice” (a term used by Gruia) up the market into the various segments, and examine it on a product-by-product basis, Avaya, Nortel, and Cisco are clearly the dominant players in the large enterprise arena. And with the Avaya/Nortel combination resulting in over 42% of the contact centre product’s market, dangerously close to the key threshold level of 43%, some analysts feel that the antitrust regulators will require Avaya to sell off assets to gain approval.

“The key issue is the DoJ rubber stamp,” according to Ronald Gruia (analyst for Frost & Sullivan). And the longer it takes to get the approval, the bigger the chance there is that the existing Nortel customers will seek other vendors through RFP’s. Gruia explains that Avaya can walk away from the entire deal if they don’t meet the regulatory requirements.

“The more pain for the customers the more likely it is they will take it to an RFP” said Gruia.

This issue could prove problematic moving forward. The channel, customers, employees need some certainty with regards to direction, and the “dark cloud” hanging over the deal’s head and uncertainty it brings will make it difficult for Nortel to continue the sales momentum moving forward. It looks like Nortel’s asset will rapidly decline in the next 6 months as their current customer base erodes and the dealer channel awaits a final seal of approval.

Avaya has set aside US$15 million for employee retention, which should provide some comfort to the 3100+ employees that are waiting for the sale to go through, but neither Avaya nor Nortel have released how many of the jobs will be kept after the sale. But if the sale doesn’t go through soon, or if the regulations are too prohibitive, Avaya will win, and Canada loses.

Some good news, the Canadian government has declared that they will not be blocking the sale of Nortel’s wireless division to LM Ericsson of Sweden, claiming that the agreement will be beneficial to Canada. Since the Liberal government has announced that they have the same position on the Avaya deal as they did on the Ericsson acquisition, another roadblock might be soon removed.

The US and Canadian governments have approved the bankruptcy sale, but there are still a lot of “If’s” in this development: If Avaya is forced to sell off the Nortel Symposium products, and If the DoJ looks at the market in individual segments, and If the Canadian government decides to block the sale – but It’s hard to say what will happen because no one really knows. And the waiting game will only make it more difficult.

The combination of an indecisive Canadian government and an unrealistic, overly protective American government might delay this process unnecessarily. So, hurry up the process and get this approved !

More:

Written by: Jason Finnerty. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Avaya wins Nortel’s Enterprise business for $900 Million

I did this post as a guest post for AllAboutNortel.com and am cross posting this on TheTelecomBlog.com.

It’s been a long downhill battle for the last many years. Nortel has been languishing in the business sector, their prized business hampered by years of poor management and financial crisis. It’s a rather unfortunate end for Nortel, the staff, customers, dealers, and the Telecom market in general.

But, every cloud has a silver lining.

The Silver Lining: Every industry needs healthy competition, and Nortel brought that in spades for many years. Healthy competition spurs innovation, lower prices, and a spirit to win. At this point Avaya’s purchasing Nortel is a reflection of the consolidation happening in the marketplace, making way for Telecom 2.0 and the changes to come. On one side, competition is healthy, and one the other, so is consolidation; It will make way for stronger players in the CPE space. That’s the silver lining.

Nortel was a Canadian Telecom institution. Actually, Nortel was a Telecom powerhouse. And there isn’t much more Nortel left to go around, especially with today’s announcement that Nortel’s Enterprise business unit has been sold to Avaya for US$900 million in cash, with an additional pool of US$15 million reserved for an employee retention program.

The Nortel business units left are Metro Ethernet Networks (MEN), the carrier business (including VoIP), the stake in the Nortel-LG joint venture, and the LTE patents, which weren’t part of the Ericsson deal.

Some of the main highlights of this deal include:
– Nortel will sell the assets of the Enterprise Solutions Business, and shares of Nortel Government Solutions and DiamondWare to Avaya
– Avaya to Pay US$900 Million in Cash to Nortel, with an Additional Pool of US$15 Million Reserved for an Employee Retention Program
– Canadian and U.S. Court Approvals of Sale will be Sought at a Joint Hearing on September 15

It’s hard not to be somewhat nostalgic about the sale of the Enterprise division, especially given it’s business history. Nortel’s origins date back to 1882 as a manufacturing arm for the Bell Telephone Company of Canada, and they were incorporated as a separate company in 1895 known at the time as Northern Electric.

Unfortunately, both Nortel, and their technology has been lagging in the market for some time – quite a difference from only a decade ago when Nortel was the largest company by market CAP in Canada, their shares making up over 25% of the Toronto Stock Exchange’s main composite index.

The last few years Nortel began losing market share, and now Avaya needs to stem that tide, consolidate business operations, and hopefully for Avaya, remain profitable. In the best of times this is a huge task. Under these circumstances, GARGANTUAN.

Avaya is a large Telecom player and certainly has the resources and brains to make this a success – it won’t be an easy task though.

Something about this auction process that has me somewhat surprised is Cisco’s lack of presence or mention at the bargaining table. Cisco is the undisputed worldwide leader in voice and data technology. At one time Nortel was their biggest competitor. And it seems that Cisco has almost ceded their fate into someone else’s hands. With the addition of Nortel, Avaya is now the number #1 voice player, by far, and now has control over Nortel’s switches and routers, clearly stepping into Cisco’s sandbox. Clearly the folks at Cisco were aware of this. I suspect they decided to let Avaya take control over this asset, mess it up, and then clean up the mess. I can’t think of any other reason why they weren’t at the table.

Either way, today marks the end of a Telecom dynasty, and the beginning of a new one.

What are your thoughts ? Is this a good move for Avaya ?

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Will it be Avaya ? Siemens ? Either way, it’s good bye to Nortel, Canada’s Telecom giant.

It’s almost like watching a really long sports game, but in this case, the game is played behind closed doors, the fans awaiting news of the outcome.

The news of the fate of Nortel’s Enterprise business unit should have been determined on Friday, and, for some as yet unreported reason, there have been delays. The speculation is that the bidding is still on going, however, there could of course be other related complications, the Verizon issue being one.

There certainly is an energy that has surrounded the news, the unfortunate end result is the dismantling of Canada’s Telecom giant.

For continued updates on the news as it progresses, Twitter seems to be the best spot.

P.S. For those looking to pass some Sunday morning time, I wrote a post on Twitter and how I, just recently, realized it’s importance.

P.P.S. It seems the best spot to follow updates is through Bo Gowan’s Twitter account.

Will it be Avaya ? Siemens ? What do you think ?

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

And the reason for the delay in the Nortel auction is …

AllAboutNortel.com is reporting that there will be a court hearing on Monday at 1PM in New York to deal with Verizon’s opposing Avaya’s acquisition of Nortel’s Enterprise business unless provisions are provided for continued support of Nortel’s equipment. Looks like we will have to wait until Monday.

P.S. I am wondering if this is the final step in the process. Perhaps Avaya won the bid with a caveat of dealing with the Verizon claim. If Siemens had won the bid then this wouldn’t be an issue – right ?

Jeff

Winning bidder for Nortel’s Enterprise business to be announced today. Avaya ? Siemens ?

At some point today, barring some major complication, the winner of the Nortel Enterprise (Corporate Networking) business will be announced. It appears that there are 2 companies bidding. Avaya has made a $475 Million stalking horse bid, and Siemens Gore will be submitting a counter bid. Early rumors were that there were 3 bidding firms, Mattlin Patterson or Ciena rumored to be the third.

It also looks like there were some complications during the day Thursday with Verizon going to court to oppose Avaya’s bid on U.S. national security grounds. “Verizon says it has purchased equipment from Nortel that is now in use by virtually every arm of the U.S. federal government, including the military, anti-terror units and 911 call centres.”

I’m wondering what Verizon is hoping to get out of such a claim ? Fair enough – The US federal government is using Nortel hardware in many of their operations. Nortel’s bankruptcy, and Avaya (or Siemens) acquiring these assets will pose a threat to US national security, but, what exactly is Verizon hoping to accomplish with such a claim ? Nortel is bankrupt. The assets are being sold to the highest bidder. Someone is going to acquire these assets, and hopefully, provide continued support to the current customer base.

This decision … to acquire and take on the number 1 phone system manufacturer and morph the staff, channel, products, engineering into one cohesive unit … That takes a savvy business team with a very deep understanding of the business, business model, and opportunities for success. And to parlay that into a new, successful business model – well, the acquiring firm certainly has their work cut out for them.

Hopefully history will prove that this team made the right decision. Stay tuned – I will be posting my thoughts and end result at the end of the day.

More: My prediction is that this thing will sell for $825 Million. Just a wild guess really. What do you think ?

Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Could the world’s 911 service go unanswered with Nortel’s demise ?

This post was written by a fellow telecom enthusiast who prefers to remain anonymous.

What impact does Nortel Enterprise have on the lives, safety and security of Canadian citizens ? How about the world’s citizens ?

Answer: Limited, with the exception of 911 Call Centres and telephony systems for various Police agencies such as the RCMP and a substantial market share in Canadian / worldwide Hospitals.

With this, it will become important that the various Government bodies that manage these services would want clear direction on support commitments on these systems from the eventual purchaser of Nortel Enterprise. Research & Development of these systems is primarily located in Ottawa and Belleville, so there really should be some motivation to secure parts of this business for the best interests of Canadians and citizens around the world given its influence on our day to day lives and expectations of service availability.

This topic could get far more complex when the Carrier Voice and Applications Services (CVAS) business of Nortel is sold. This business holds huge market share for home phone services delivered by the various Carriers across Canada. If your home phone service is provided by Bell, Telus, MTS, SaskTel or Aliant, then chances are your home phone line is provisioned by Nortel equipment known as DMS or CS2000. Bell and Telus have approximately 11 Million Network Access Subscribers (Wireline) across Canada according to their recent financial reports. Sustaining 911 Services will become very critical here so a long term product support plan should be of top priority and interest to all levels of Government and Carriers across Canada.

On Monday September 7th, the City of Calgary experienced a 911 system outage that resulted in 37 lost calls. It isn’t known yet the cause of the problem but this incident shows that long term support of mission critical systems needs to be a top priority.

Worldwide the numbers are more staggering. There are 115 Million wireline and wireless ports delivered to 350 carrier customers, making Nortel the number 1 vendor in this space.

As Nortel prepares to complete the auction for their Enterprise Business on September 11th in New York City, we need to be aware of the potential purchasers’ Product Support plans for Nortel products, services and solutions. With over 75 Million ports of Voice infrastructure and 75 Million ports of Data Infrastructure deployed using Nortel products, long term support and product plans will have substantial influence and perhaps impact how we use communications services around the globe.

More: Jeff’s thoughts: I have read and followed many articles and posts over the last few months and am surprised at how little attention has been paid to the 911 and CVAS issue. The Canadian Government has been concerned about Ericsson’s acquisition of Nortel’s CDMA business and keeping jobs in Canada. Meanwhile, we have this ticking time bomb hanging over the “911” emergency support service infrastructure and little has been mentioned.