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Nortel expects to emerge from Chapter 11 bankruptcy protection

Ian Grant

Nortel expects to emerge from bankruptcy protection within 12 to 24 months, says one of its European executives.

François Lançon, Nortel's new president of enterprise sales for EMEA, said the company had filed for protection against its creditors while having $2.4bn in cash and a "reasonable" order book for the next 12 months.

Lançon said a customer survey just completed showed that half were not going to change their plans because of the Chapter 11 filing, and only 3% to 4% were "deeply worried" by it.

He added that his immediate aim was to change his division, which contributes one-third of Nortel's revenues, into selling solutions rather than boxes.

"Rather than talk to the network manager, as we have done in the past, we would like to talk to the CIO," he said.

Lançon's strategy appears similar to that followed by BT's Global Services division, which last quarter was blamed for a £336m write-off.

Industry speculators say much of this was due to problems with BT's contract with the NHS's National Programme for IT where it has two multi-billion pound contracts - one for the NHS's national private network known as the Spine, and one to deliver an electronic patient record system.

Lançon said Nortel is a partner with BT in the NHS projects, but was unable to comment further ahead of Nortel's latest financial results, due next week. But he indicated that he would welcome business such as the Spine contract, especially in the healthcare, government, financial services and hospitality sectors.

"Unified communications to improve business processes" would become the company mantra, he suggested.

He said the maturity of customers prepared to hear Nortel's pitch came mainly from the UK, Germany, the Middle East, Australia and India, the last because of its highly developed software and outsource sectors.

Lançon said 70% of Nortel's products were software. "We have a very good application development platform and systems development toolkit that we can use with partners to deliver solutions," he said.

He added that he had moved quickly to ensure that Nortel's channel partners were looked after despite the Chapter 11 filing.

"We had to protect them, and I've launched a number of incentives to ensure that they can do profitable business," he said.

And the London Olympics in 2012, where Nortel holds the communications contract?

"Absolutely no question about that we are going to retain it and deliver. We are building it even now," he said. "After all, it's the only way I might get a seat."

News broke this morning that Radware had bought the application development division that Nortel aquired in 2000 from Alteon.

The division specialised in systems for the higher layers of the seven-layer Open Systems Interconnect model.

Computer Weekly asked Lançonif this affected his plans to sell business process optimisation solutions to enterprise customers.

"It doesn't," he said, "at least not in any negative way. The L4-7 portfolio was always a specialist technology area with dedicated R&D resources, separate to our applications development teams.

"The divestiture of these assets has no direct impact on other areas of the business.

"Moreover, it allows us to focus resources on our core competencies and drive industry leading differentiation for enterprise networking solutions (including L2-3 for access & core, WLan, management and security). This lays the foundation for higher-end integrated applications and a superior end-to-end unified communications solution."

Nortel update: president confirms restructuring plans >>

Nortel CEO moves to stem customer exodus following bankruptcy >>

Nortel UK bankruptcy threatens staff pensions >>


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