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Nortel a Dinosaur?

I wrote this article while there was still a small question about whether Nortel might survive (#SpoilerAlert they didn’t).

Nortel Announces More Cuts

The 3rd quarter results for Nortel came out a day ago. A new corporate model was where Nortel would set up three business units but cut 1300  more jobs.

Nortel will also be looking at their Real Estate holdings to see whether there is money in those areas to help the company survive. A freeze on salaries was announced, and a hiring freeze, which seems an obvious move. I have seen a few experts question whether this means a freeze on Executive compensation packages as well? John Chambers has taken a $1 in tough times at Cisco. Will Nortel leadership do the same?

Soon to be Extinct?
Soon to be Extinct?

Is Nortel a Dinosaur?

It does seem to be that maybe the problem with Nortel is not necessarily only its business models, but perhaps its markets are starting to dry up.

For the past few years, their cash cow, the CDMA Wireless business, has been starting to dry up for revenue. Now with Bell Canada and Telus announcing a shift by promoting an “overlay” GSM/UMTS (HSPA) network (shutting Nortel out of the contract), that may well be another sign of the coming extinction of this former Telecomm giant.

The splitting of the company into three distinct business units allow for quick and easy:

  • Sale of the division, if needed to raise cash
  • Shut down of the division if the business is unable to compete.

New Housing Price Increase Slows

Across the country, new house prices have increased by 2.1% year over year. In Ottawa year over year, the new house prices are up 4.3%, which is interesting. However, Edmonton seems to be having price drops of over 5% year over year as well. It depends on where you live, but buying a new home is increasing (but slower than before).

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