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Nortel Continues to Spin in Circles

The revolving door that has been moving top executives at Nortel continued to spin last week as Joel Hackney was named President, Enterprise Solutions and 20 year Nortel vet Steve Slattery bid the company adieu.Turbulence has become synonymous with the network equipment supplier in recent years. At one time, the company was giving Cisco a run for its money as the industrys largest and most successful network equipment supplier. Since the turn of the millennium, Nortel has struggled to find a niche in the highly competitive network equipment market and been steadily losing its influence  as well as revenue and employees. Nortel has shed a staggering 60,000 employees since 2000, with about 3,000 of the cuts coming in February of this year. The company has also been involved in a couple of high profile lawsuits centering on questionable accounting practices.

The firms most recent savior is Mike Zafirovski who was named President and Chief Executive Officer (CEO) in 2005. To date, Zafirovskis ambitious plans have been long on promises and short on delivery. The shuffling of Slattery to the sidelines underscores the companys helter-skelter business strategy. On the surface, Slattery was one of the few executives doing a good job. His groups second quarter revenues were $590 million, a 23 increase compared its 2006 number and the fourth consecutive quarter of year-over-year growth. That sounds good, so what would lead to his exit?

The answer to that question is unclear. Perhaps, Slatterys long term vision for his business unit did not jive with Zafirovskis plans. Perhaps, the division was generating revenue but not turning that money into profits. Perhaps Slattery was tired of working for the same company.

What is clear is that Nortel, which was once the industrys gold standard is now a questionable brand. For those who had doubts about the companys future, the reshuffling adds to their consternation. For those companies taking a look at its products, the change raises doubts about the company long term viability. In fact, there have been rumors about Nortel possibility being acquired, but it is not uncertain how much the network equipment supplier would fetch for its stockholders.

Medium and small business owners now see potential problems in buying from a vendor going through a seven year transition. Would such an enterprise want to trust its networking future to a vendor whose focus may not be totally centered on servicing its customers? Unfortunately for Nortel, such questions will remain as long as the executive door at the company continues to spin.

Do you have Nortel equipment? How do you feel about the companys current direction? Would you think about buying from another vendor?