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 ? 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

Telecom 2.0 – Where are we headed ? Nortel, Mitel, Avaya, Cisco, ShoreTel …

I did a guest post on AllAboutNortel.com yesterday. You could read the entire post here: , or, I have re-posted my guest post on TheTelecomBlog.com I know, seems strange that I am re-posting my own blog posting, but, I actually did this as a guest post for another site. Mark Evan’s has been a great help and a big supporter of this blog.

No, I don’t have a crystal ball but I wish that I did. I am looking at the next generation of telecom, and wondering where this rapidly evolving market is headed. I’ve been in the telecom business for 19 years – it’s almost like a 6th sense (although my sense is sometimes off).

With that in mind, let me offer my take of where the enterprise telecom market is going in the short and long term. Keep I mind I’m writing this post at a time when the customer premise-based equipment (CPE) market is at a crossroads.

Nortel’s bankruptcy and uncertain future has left many current and prospective customers wondering where to take their new telecom equipment business. Does it make sense for an existing Nortel customer to spend money on upgrading Nortel equipment, or, as my father explained in my early years in business, “never throw good money after bad”.

In other words, many of my clients are now throwing out their older Nortel gear in favor of new hardware, rather then spend dollars on upgrading their older Nortel systems.

Either way, Nortel is still a large player in the market but their absence at the table has left a void filled by their competitors. Of course, over the near term this issue will be resolved.

And what will follow in the enterprise telecom market?

In the short term, many customers looking for CPE will gravitate toward some of the larger players such as Cisco, Avaya, Mitel, and NEC. I believe these players will continue to shuffle market share around ever so slightly. There are also some smaller players in the CPE market – notably ShorTel, Asterisk / Digium, and Microsoft.

Some thoughts on some of these players:

- Microsoft hasn’t become the competitive threat I suspected they might – the enterprise market hasn’t adopted Microsoft’s OCS or Response Point telecom equipment – yet.

- Cisco is obviously making headway into the larger space but their SMB products haven’t been that widely adopted – yet.

- Asterisk, although a threat, isn’t taken that seriously within the enterprise market – yet. It seems that customers need a “manufacturer” to scream at!

The other spectrum of the enterprise equipment space is the looming threat of Hosted VoIP, Google, and Skype, which is hanging over the CPE vendors like a very dark cloud.

The world is gravitating toward an IP-centric model, and the “cloud” at a rapid pace. Over the next few years, there will a gradual adoption of cloud telephony. In time, the technology will be widely adopted as the technology evolves and becomes more reliable.

As a CPE vendor, I view the threat that companies such as Google and Skype hold over the CPE market with some fear. Not today, but certainly in the future. Cloud telephony represents a paradigm shift – something to be watched, and shortly, feared. I am going to label this next generation of telephony as “Telcom 2.0”.

What does Telecom 2.0 look like ?

Speaking along the lines of paradigm shift, the next generation of phone systems will be a highly intelligent server, much as they are now. The talk/communicate medium will not necessarily be the bulky phone on your desk, but rather a variety of end point devices.

Skype, Google, Facebook, iPhone, Blackberry – these all-in-one appliances will be the talk/communicate path, and the server at the back end will bridge these technologies together. And with the recent news of Silver Lakes (Avaya’s parent company) being part of an investment group buying a 65% stake in Skype, it will now bring together the old and newer emerging technologies.

In the meantime, I’m now watching the race for Nortel’s enterprise asset – the winner will change the landscape considerably.

What do you think? Where is Telecom 2.0 heading?

More: AllAboutNortel.com received some amazing, very insightful comments which can be read here.

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

Avaya-Nortel Merger: Why It’s Likely to Succeed

I’ve just read Eric Krapf’s post titled: Avaya-Nortel Merger, why it’s likely to fail. In it Eric sites many reasons why he believes, as the title suggests, that the MERGER take over between Avaya – Nortel will fail. Although well written, and arguments well presented, I believe Eric is way off base. 3 weeks ago I also questioned the take over, further research has now proven otherwise. Some of Krapf’s reasons include:

KRAPF:
Companies overpaid and have too much leverage–crushed by debt & then the bloodletting begins

THETELECOMBLOG.COM
I suppose the presumption here is that Avaya is going to overpay. Is $475 Million a reasonable offer, or a steal ? I suggest $475 Million is a steal. Although I believe that Avaya will ultimately be forced to pay more then $475 Million, and that Nortel Enterprise will end-up a bidding war selling for $800 Million, even at that rate, should Avaya decide to purchase, could make their money back in a very short time.

KRAPF:
Poor strategic and tactical planning–once the deal is done, the executives can’t decide what to do next (call it “the Iraq problem”)

THETELECOMBLOG.COM
I’m sure that there are some very smart people (many of whom I have met personally) sitting in a dark smoky room planning and strategizing how they will make this take over succeed. Krapf suggests poor strategic and tactical planning – conjecture really. Nothing backing this claim up !

KRAPF:
Cultural clashes–Geeks-Suits, Europeans-Americans, Data heads-Bell heads

THETELECOMBLOG.COM
Cultural clashes – this is a take over, not a merger. Zafirovski has left the building. BOD has been reduced from 9 to 3.
Geeks-Suits – A year ago maybe. Avaya’s got a new chief in town and he’s doing a fantastic job.

KRAPF:
Strategically ill-conceived–even when the entire industry doesn’t see the value, somehow the buyer knows something everyone else doesn’t

THETELECOMBLOG.COM
The industry does see the value. Nortel’s got some major market share. Customers have been buying that value for a LONG time. Nortel has a LOT of product in the market. Lots of maintenance contracts, government contracts, customers, channel partners … and that revenue will now goto … “principally” AVAYA !

KRAPF:
The buyer forgets it’s really acquiring people
The Avaya-Nortel deal is really about bringing together very talented people quickly (my worry is that many of the really good people may already be gone) to create something unique which offers genuine value to customers looking for communications technologies, services, and support. The deal and its ability to succeed is ultimately about employees, customers, channel partners, and suppliers. It is about making the deal happen with speed, minimal debt, and minimal impact to these key groups of people.

THETELECOMBLOG.COM
Yes, good point Eric. And, as I stated earlier, Avaya has some amazingly talented business folks running the show. Avaya 2009 is not the same as Avaya 2007. Avaya 2007 was a stodgy, slow moving organization. Avaya 2009, post the Silver Lakes, TPG acquisition, has morphed into an entrepreneurial well oiled machine. A year ago I might have been more inclined to agree with you Eric. Not today. When I met Charlie Giancarlo last June, and then Kevin Kennedy in January of this year they both preached the same message. “Avaya WILL become a dealer centric organization within 3 years.” And the changes in the last 6 months have been outstanding. Avaya has made some big commitments in the last year, and they have followed through. And this is a BIG ship to turn around – kudos to Kennedy and his team for what so far seems like a job very well done. Granted, there is still some work to do, but, given what I have witnessed in the last 6 months the NEW Avaya is completely different from the OLD Avaya.

Yes, Avaya has been promising channel changes for the last 8 years. They’re doing it. I see the difference. Digitcom is a channel partner. I just finished a full day’s Channel Summit meeting held at Avaya’s Canadian head office. This isn’t something they would have done a year ago. That’s because this is a NEW AVAYA. Their focus is channels.

KRAPF:
I have an idea of who should–without naming names, I can tell you the profile of the “company” that has the best chance of pulling it off. The acquiring firm needs to be a private equity group with leadership who knows the communications business, has an intimate understanding of Nortel Enterprise, genuinely knows the people side of technology, and can quickly convince customers that it makes good sense to once again buy Nortel products and services.

THETELECOMBLOG.COM
Eric, you just described Avaya !

More: You can read some more comments on AllAboutNortel.com regarding this post.