Which companies will Nortel take down in its crash?

Many in the industry have gone through a restructuring over the past 10 years. However, going through this process today given the capital markets is not the same as going through restructuring 2 or 3 years ago. I have personally been involved in a Chapter 11 process with a company that no longer exists as a stand-alone entity.

What many Nortel loyalists still seem to deny is the fact that out of this process Nortel will not come out as the same company that we have known and over the years grown to love. Many will suffer holding on to the hope that brighter days will come.

In a Chapter 11 restructuring the court will look out for the best interest of the debt holders. Whether people agree or not is irrelevant, the reality is that customers, stock holders, vendors and others take a back seat.

At high level the many products that Nortel currently offer will be analyzed in detail.

I can only speculate that the segment to be hurt the most will be the carrier division (CS1500/CS2K and Unified Communications). Smaller telcos, CLECs, ILECs and Cable Cos stand to loose the most. Opportunities here exist for vendors like Sonus and Alcatel as well as the smaller switch players like Broadsoft, Metaswitch, Taqua and other international companies.

The enterprise biz group will most likely be put on the chopping block as well as the consumer group. Cash raised there may be used to satisfy debt guarantees. Opportunities there exist for Ciena, Huawei, Infinera, Avaya, Cisco, etc.

Contrary to most people's opinion the strongest business group, the metro ethernet product line, stands most to win out of this situation. Nortel was unable to sell it in the past due to the valuations that it was trying to get out of the deal (to satisfy debt- a last ditched effort), however, the portfolio and sales where strong in that vertical.

I could see a scenario where all other lines of business are either terminated (capped) or sold and the Nortel as we know it today emerges with a strong position in the carrier ip and carrier media segment (iptv). There are liabilities that the court will also take into account (service commitments) which may affect the outcome but the reality is that those may be fulfilled in a limited manner just to avoid "breaking the law".

One thing is for certain, if you are a Nortel customer you don't have to panic - yet. Be assured that the Nortel you have known this far will never be again. For those of you who are like I have been in the past - Nortel loyalists - it's probably time to let go of the dream and wake up to the new ugly reality that is "restructuring".

You can't compare Cisco and Nortel.

Cisco has $27 billion in cash and continues to generate cash every quarter.

Nortel has bled off $7 billion over the past couple of years and as of January fired nearly all of its senior management except for the CEO. And I'm mystified as to why he still has his job, given the performance of the company during his tenure.

If Nortel had spent less time burning money on CNN airtime and more effort reassuring and supporting VAR and channel partners, they might be gaining some market share.

Any hope of them of Nortel getting top dollar for assets went down the tubes this fall. Filing for bankruptcy means that buyers can set the price they want...

It appears the author has a bias against Nortel. If this was not the case then maybe the word 'restructuring' would have been used instead of 'demise'. Chapter 11 is a credit restructuring and not a liquidation. Many corporations, like K-Mart and PG&E, have gone through this process successfully and emerged as a viable, profit making operation. Times are very difficult and even Cisco has seen it's stock loose more than half its value in the last 18 months. At least Nortel is trying to overcome their financial difficulties without asking for a bailout like our financial institutions. All things said, I believe it's a bit premature to call this the 'demise' of Nortel.

Nortel hasn't filed for bankruptcy. Just bankruptcy protection. There's a big difference.

Verint has an OEM for recording with Nortel, while NICE discontinued the coupled integration 18 months ago.