Nortel CEO: This Will Be A Growth Story

Nortel CEO Mike Zafirovski said yesterday at the RBC Capital Markets Communications, Media and Technology Conference in Whistler, British Columbia that the telecom equipment maker is poised to embark on a growth story. We’re “starting at ground zero,” he said and “we have a very tall mountain to climb.”

He said the company will announce next week how it plans to spend its $1.9 billion research and development budget. Among the more promising technologies that Nortel will likely invest in are IMS, WiMAX, and IPTV.

“We have teams working on where and how we will be investing $1.9 billion,” Zafirovski said. “We have thrown a challenge for us to gain 20 points of market share, at a minimum, in anything in which we participate today.”

Business lines where Nortel trails the 20% market share figure are presumably up for reevaluation.

According to Zafirovsky, “It’s a combination of business transformation and realigning our investments to have this be an organization that has profitable growth as a key expectation.”

Regarding Nortel’s service business, Zafirovsky vowed to increase the portion of Nortel’s revenue coming from services and applications. While current estimates peg services as accounting for less than 20% of Nortel’s revenue the CEO believes it should be 50% to 100% above where it is.

Mr. Zafirovski is already making some changes. Earlier this week it was announced that George Riedel has been named chief strategy officer at Nortel. Riedel will report directly to Zafirovski, and will be responsible for leading all of its corporate strategy including business development and mergers and acquisitions.

In addition, Riedel will focus on emerging technologies, market opportunities, and strategic partnerships, and will drive all related key decision-making processes.

As of 3pm today, Nortel’s stock was up 19 cents to $2.96/share.