Nortel's Downward Spiral Continues

Nortel's fourth quarter revenue brought unwelcome news. In fact, the numbers were so bad that more than 2,000 employees will need to find new employers ASAP, as the vendor continues to struggle in the highly competitive network equipment market.The company's fourth quarter revenue of $3.20 billion was down four percent from last year, and its annual sales of $10.95 billion also represented a four percent decrease from 2006. For Nortel employees, the key numbers were 2,100 and 1,000. The former represents the number of positions that the company will eliminate, and the latter is the amount of positions that will be reassigned within the organization. Typically when companies go through such reorganizations, areas that interest clients, such as customer service, take a hit.

On the plus side, Nortel has been having some success in those market sectors that impact small and medium businesses directly. Nortel's Enterprise Solutions group saw its revenue dip by three percent in 2007, and the company's Global Services group saw its income actually increase by 12% during the year. Despite those numbers, Nortel is cautious about its future. The network equipment vendor projects that its 2008 revenue will grow in the low single digits.

Like other network equipment suppliers, Nortel has been struggling to adjust to declining growth rates and intense pricing pressure. Historically, many small and medium businesses have found that Nortel offers high end functionality and quality service at reasonable prices. Now with the company struggling to adjust to current market conditions, such faith becomes harder to justify and doubts about the companys long term future intensify.

Do you have Nortel equipment? What do you think of the company's management team? What do you think the future holds for the company?